End Of The Bears?

FUNDAMENTAL ANALYSIS
The Dow put up an amazing fight against the bears today as ADP payroll report beat estimates along with the best productivity in 4 years! Rising productivity and rising private payroll! What else do you need to know to get convinced about the strength of the US economy??!! It certainly took the bears an amazingly long time to get on the side of the Bulls! Well, don't get too happy and over confident to the upside yet... remember, the big mover this week is this Friday's Job reports and the ADP payroll report have a pretty low historical correlation with the Job reports due to differences in the way data is collected. But the good thing is, there seem to be lesser reasons lately to be bearish. In fact, even with the low correlation between the ADP employment report and this Friday's Jobs Report (see stock market calendar), beating estimates by such a HUGE margin does point to a higher job report no matter what. In fact, 70% of the CEOs in USA is optimistic on the economy, which means that they are probably going to continue employing, which also points to a better job report this time round. Almost all the bearish points that I raised up over the past week has been negated by today but as a conservative investor, I would rather see what the Job report is like and what it's effects on the market is like for real instead of trying to read the tea leaves.

TECHNICAL ANALYSIS
Well, I must say that the Dow did a pretty encouraging bounce today. This is especially encouraging as the Dow bounced off the 200DMA which started the rally last August. In fact, the 200DMA held up for 2 consecutive days, making it a short term support level. Well, does this mean that this reaction rally has survived the pullback I mentioned yesterday and has resumed the bull trend? Well, I hate to say this but the pullback has been so shallow and on so low volume as to make it rather insignificant. By insignificant, I mean that the pullback may not have started yet! Today's rally look more like the resuming of the reaction rally rather than the end of a pullback! Does this mean that there is going to be a pullback soon? I would think so. In fact, I expect a significant pullback below the 200DMA before I declare the pullback over! The pattern just isn't adding up clearly. So, here's my take today... If the Dow follows up tomorrow, breaking the 30 Nov high of about 13466 significantly, I would say that the odds of a rally from here is very high. If the Dow ditch tomorrow or on Friday, then my pullback argument stands.


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