Banging The 13000 Wall...

FUNDAMENTAL ANALYSIS
The bears could certainly hear the loud thumps on the other side of the 13000 wall as the bulls attempted to break it down today. The Dow gained 189.87 points today as optimism returned on optimistic jobless claims number and an ISM index reading that turned in at the same level as March despite falling short of estimates (48.6). The fact that the ISM index turned in at the same level as March kept the ISM recovery story intact, which is of course a bullish sign. The ADP report as well as the jobless claims report so far continue to point towards a recovering job market, which of course is adding to the speculation on positive numbers in tomorrow's Job Report (see economic calendar). Speculation surrounding an optimistic Job Report may also be what drove the market higher today. Adding to the optimism is the big follow-up in the decline in oil price today! Yes! Like I said yesterday, crude oil price needs to follow up to downside today in order to form a significant turnaround and it happened just as we hoped. Crude oil price is the final hurdle standing in the way of a full scale rally (how many times do I have to repeat this?) and if it continues its way lower, below the $100 mark, the market could truly go into a sustainable rally. Let's look forward to great Job numbers tomorrow and see if it sparks a rally next week.

TECHNICAL ANALYSIS
The Dow made for the 13000 resistance level today and ended just slightly higher at 13010. 10 points above a resistance level does not signify a breakout. With the Dow still in overbought condition, I would not be surprised if the Dow retreats a little before making for the 13000 resistance level again for a significant breakout. That said, on a slightly longer time horizon, the 13000 level is not much of a level that will stop the bulls. In fact, we could see new highs this year despite widespread pessimism. The Dow is extremely used to trading in overbought conditions when a bull trend is in place. Is this it? Is this the bull trend that is going to keep the Dow overbought for a while more? As a technical trader, I would rather go with the trend then against it.