GDP WEEK!

Welcome to GDP week and another week of disappointment for the hopefuls. Yes, there is no doubt about it, GDP is going to turn in much weaker than the last number and consensus is calling for a negative figure of over 5% (see economic calendar). Yes, this is the most severe recession since the great depression. In fact, the Dow is now at the doorway of the low of the last crisis in 2003 at about 7197 points. If the Dow goes lower than that, it will mark the first time the low of one crisis has beat the low of the previous crisis since 1975.

On the technical front, the Dow broke the November low last week by a meager amount, which does not constitute a significant breakout. Which means that it is still in a short term down trend but an intermediate term neutral trend. The volume surge last Friday was pretty much due to options expiration and hence cannot be taken as a blow off day as well. This week is going to be critical. If this week closes the Dow decisively downwards, the Dow would resume intermediate down trend with near term support on the low of the last crisis in 2003 of about 7200 points... yes, its not that far away and if that gets broken as well, we would have to switch to monitoring the strength of the downtrend to spot the next support level.