A Heavy Weight Week Ahead..

FUNDAMENTAL ANALYSIS
Yes, its going to be an extremely heavy weight week ahead with the rate decision on Tuesday and the Consumer Price Index on Friday (please see stock market calendar). The Job Report last Friday failed to move the market, indicative of the importance investors are putting on the rate decision instead. Nobody knows what the Feds will do yet except that 25 basis points had been priced in for a long time now. This means that if the Feds cut only 25 basis points, we could still see a significant pullback. Well, there really are very little incentive left for a rate cut with the real economy doing extremely well and inflation under good control. If the Fed does cut 25 basis, they risk inflating the economy and deflating the already weak currency. Let's not forget that the Fed's mandate is "Keep inflation under control" and "decrease unemployment". It appears that those mandates are met so far with the inflation numbers and the employment numbers... so, where's the motivation of a cut?

TECHNICAL ANALYSIS
The Dow continues to make a series of higher highs and higher lows so far on a weekly scale and it is obviously making a new leg up right now. It seems like, from a technical analysis point of view, that the Dow could continue to go up from here and make a new high. That new high could happen in Jan 2008 if this trend holds up.


Dow Technical Chart By Best Charting Software TC2007!