Heavyweight Week Ahead!

Yes, every first week of the month are heavyweight weeks due to the release of 2 heavyweight data... ISM Index and Jobs Report (see economic calendar). The Dow has been beatened down over 100 points last week in expectation of lousier numbers. Indeed, like Obama said, this is going to get worse before it gets better and that definitely falls within my expectation of a final capitulation before a recovery. Consensus for ISM index tomorrow is for a lower number of 33.8, pointing to continued contraction of the US economy. From all the economic data received so far, it does seem like a lower number is in order. This might also mean a higher unemployment number this coming Friday, which might of course spur some more buying into the peak unemployment reversal scenario.

On the technical front, the Dow continues it freefall after that one day bull trap last week. However, one interesting thing to take note of is last Friday's unusually high trading volume. Last Friday's trading volume is typical of quadruple witching days but it definitely wasn't a quad witch day last Friday. From the intraday market action, we could see lots of bullishness and bearishness with the bears winning the day finally. It seems like there is an army of bulls interested at this level. Big volumes like this usually marks a turn around, even a short term one, if it is supported by an appropriate candlestick setup, which in this case, was missing. The Dow continues in all out bear trend and we will monitor for changes daily.