HAPPY CHINESE NEW YEAR!

Today marks the first day of the Chinese year of the Bull (some call it ox but my associates and me prefer Bull for obvious reasons). Last year was the year of the rat which was exactly as it represents... disgusting. Yes, the year of the rat has been awful for the stock market and world economy, so, will the year of the Bull usher in a bullish year for the stock market and world economy? Seriously, I am optimistic that 2009 is the year of the bottom and the beginning of the recovery and I believe a lot of people out there do not think so, especially cab drivers. Yes, there is a saying in wallstreet that when cab drivers are starting to tell you how bad things are and that you should wait a few more years before investing, then it is where the bottom is. Yes, I just heard that from a few cabbies over the last few days.

This is going to be a heavyweight week for the stock market with the leading indicators on Monday, FOMC announcement on Tuesday and GDP numbers on Friday (see economic calendar). Obviously, the jobless claims and Durable goods orders will also be in focus on Thursday as investors look for advanced signs of a recovery. Not surprisingly, the consensus for all these numbers are for the worse and I am not expecting any turnaround numbers as well. However, worse numbers doesn't mean that the stock market cannot rebound. In fact, the stock market has rebounded on the worst numbers of each previous crisis, particularly on peak unemployment.

The Dow ended slightly lower for the final week of the year of the rat, finding significant support around the 8000 level. With the Dow in short term overbought and bullish momentum rising, this could be a bullish week as the Dow pulls back up into its short term neutral channel (yes, no bullish breakout yet). However, this is on condition that the 8000 points support level holds as this week is definitely going to be an extremely volatile week with all that heavy weight economic numbers all converging in a single week.

Finally, to all chinese folks and all of you celebrating as well, HAVE A PROSPEROUS CHINESE NEW YEAR! GONG HAI FATT CHOY!!!