Bulls and Bears In A Draw...

FUNDAMENTAL ANALYSIS
The Dow closed flat today as it gains a mere 0.57 points or 0.00%. Not only is the index flat, advancers also parred decliners 1 : 1 and the total equity put/call ratio also turned in 1.03 today. It is a rare day where every indication seems to sing to the same tune... Bulls and Bears ended in a draw today. The day started out with the bulls in charge for the first half of the day and the bears for the second half. Investors are struggling and balancing the prospects of a diminishing rate cut against an economy that seems to be picking up at last. This battle is likely to rage on until the CPI and PPI numbers later this week (please see http://www.mastersoequity.com/option_trader_hq.php ) and I am secretly optimistic.

TECHNICAL ANALYSIS
The Dow is now in a perfect setup for another leg in its rally. It showed strong support as it rested atop the 30days MA as the short term stochastics entered oversold region for the first time since March 2007 and started to turn up. This looks like a perfect textbook technical correction within a sustained bull trend. We should see the Dow resume its Staircase formation soon.


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