At The Door Of A BreakOut Again...

FUNDAMENTAL ANALYSIS
12992.66 is the level the Dow closed at today, right at the doorstep of the 13000 resistance level once again! The stimulus behind the move is clear... the retreat in oil price below $125! One interesting phenomena to take note of today is that the jobless claims number and the Empire state index actually turned in slightly worse that expected but investors don't seem to care at all! Why is this so? It is clearly because investors are already in the "recovery mental model"! With this mental model in place, investors would take negative numbers lightly and put more weight on positive numbers. Yes, this is the exact mentality that results in bubbles when reality fails to catch up with expectations. For now, this is definitely working in the advantage of the stock market. Clearly, the only thing investors are watching now are energy prices... the final straw that I have been talking about for months. The short term fundamental for crude oil is definitely corroding with falling demand and a coming surge in supply, and stocks would certainly rally onwards with a retreat in oil prices.

TECHNICAL ANALYSIS
Tomorrow's the May options expiration and that could produce quite a bit of volatility and we will be watching for a breakout of the Dow above 13000 significantly on strong volume (read my article on the mental principle of technical analysis). If the Dow shows weakness and retreats tomorrow, a reassessment would need to be conducted as failing at the same resistance level twice usually lead to something nasty. For now, none of my technical indicators is showing any significant weakness.