Economic Expansion Without Inflation Pressure

FUNDAMENTAL ANALYSIS
The Dow skyrocketed 187.34 points today the very moment the Fed Beige book release an economic view that suggests "Economic Expansion Without Inflationary Pressure"! Wow, what gets better than that? That is the kind of news the stock market rallies on. In fact, investors have been secretly bullish on the release before it even happened as advancers led decliners more than 2 : 1 before the release.

The Fed Beige Book is a summary of anecdotal information on current economic condition from each Federal Reserve Bank in each District through reports from Bank and Branch directors and interviews with key businessmen, economists, market experts, and other sources. The Fed uses this report, along with other indicators, to determine interest rate policy at FOMC meetings.

The main worry of economic expansion is inflation. Economic expansion without inflation truly is the holy grail of every economic and as long as this continues on, the stock market will move onwards and upwards. The next thing that can push the market even further are favorable PPI and CPI numbers, supporting the view that inflation is indeed well under control.

TECHNICAL ANALYSIS
Yesterday's ditch proved to be a fake out indeed as the Dow regained ground in one day and stood atop the 30MA support line again. In fact, it is now 5 points higher than last Friday's close and all our short term momentum indicators are showing the beginning of a bullish momentum. Looks like my view still stands so far and I await the come back of the staircase formation again. :)


Technical Chart By Best Charting Software Of The Year : Telechart 2007!