Everything's Nice & Rosy?

FUNDAMENTAL ANALYSIS
How can I finish writing about everything that happened today? :) Q3 GDP's up, PCE index's controlled within a nice 2.1%, ADP reports higher private sector employment growth, and most importantly, the Feds cut 25 basis points off the discount and fed fund rate... as expected. Well, the problem today is exactly that the rate cut was way too expected. In fact, the Dow was up nearly 100 points before the release! That was why the Dow went briefly into the red the moment the release was made. A 25 basis point cut in the fed fund rate and discount rate really does very little for the market and the economy in general, however, it really did hurt the dollar really bad, resulting in a new low against the euro. With the Fed release behind us, the real fundamental in the economy takes over... how does the odds stack up? On the positive side, Q3 GDP beat analyst estimates of 3.1% by turning in at 3.9%, driven mainly by exports, jobs are growing in the private sector, particularly in the service sector and core-PCE turned in a remarkable 1.9%. On the negative side, crude oil and heating oil continues to reach for the sky, compounded by coming winter, Chicago PMI index turned in a contractionary number and a dropping dollar (which has a small effect on inflation). Insofar, it seems like the good and the bad are in a deadlock now and the ISM index tomorrow (heavy weight number 1) and the Employment report on Friday (heavy weight number 2) should help investors decide if everything is as rosy as it seems now.

TECHNICAL ANALYSIS
No surprise on the technical front as the Dow continues it journey upwards after bouncing right off its 30WMA. However, it cannot be taken that the Dow is going to continue upwards from this point onwards as it closed within the 30DMA resistance band, which can still take the Dow down for a few days before it muster enough strength to make another break. We saw the Dow doing that back in 8 August where it headed straight down right after entering the 30DMA resistance band. Now, what is this "resistance band" that I am talking? That's what technical analysts have so wrongly deemed to be "resistance levels". Resistance level is never a thin and narrow 1 pixel line, no, every resistance level has effect around the level itself resulting in more of a band than a level. So, is this a good time to accumulate? I would say that this is a good level for a cautious and moderate accumulation, enforced with a sensible stop loss policy.


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