Dow Continues Sideways Ahead of GDP

The Dow continued its short term neutral trend today closing down 8 points. The bulls took the day from the bears who opened the market down significantly after a lousy store sales report. This goes to show that there are still significant bullishness in the market. In fact, investors have been continuously reallocating assets from bonds into equities over the past few days as bond yield rises across the board ( see bond yield curve). This could have been the source of support we have witnessed over the past few days.

Consensus for GDP is a better number of -5% from -6.3% last month. Personally, I think this is a dangerous call that could spark an early sell-off whether or not it is met. This also coincides with the Dow still struggling at the 8000 points resistance zone which could start a pullback if a significant down day results from this. So far, every technical indication, from short to intermediate term, have been shouting "Pull Back" but the market has been resilient. One thing can be sure, once the market decides a direction, the move will be sharp and significant. Neutral trends are like coiling a spring... the longer it coils, the bigger the resultant action.