Battle of the Bulls and Bears...

The US market was mixed today with the Dow closing up by 50 points as the epic battle between the bulls and the bears continued...

We have seen this battle between the profit takers and investors jumping in on all the economic recovery news since Monday. The profit takers would take the market lower during the first half of the day and then buy back by the second half. Market was also under some pressure due to the rise of crude oil prices on the drop in the dollar. My economic recovery prediction earlier this year really look like its coming to be and with that, we could expect all the same old stories of the past to come back to haunt us again soon, only this time, stronger; weakening dollar, inflation, high oil... etc...

For now, the market continue to be resilient and the Dow continue to muster energy for a break towards the 9000 resistance level, which is going to be a strong one. That was the band within which the Dow was caught for several months not so long ago and this time, the 200DMA joined in the fray. 200 days simple moving average has a long history of being a strong resistance/support level for both the market and individual stocks. In fact, the 200DMA has provided support for the 2005 - 2007 primary bull trend and has acted as resistance for this market crash in May 2008 as the Dow collapsed right after failing to breakout. Only thing is, this time, the Dow does look like it has a fighting chance and a significant breakout and holding above the 200DMA may signifying a reversal. However, I do not think that the breakout will be like hot knife through butter and I do expect a significant pullback before a breakout. However, these are only my predictions and opinions based on technical cycles which may not play out exactly by the book. I usually take the cue on actual breakouts rather than predictions. I believe that the stock market isn't a place for soothsayers.

Investors will be watching out for tomorrow's retail sales (see stock market calendar) with consensus expecting a positive number of 0.1% up from last week's -1.1%. The weekly retail sales is an extremely volatile number which can go between positive and negative all the time. This is why analysts prefer to look at its yearly trend instead. If the retail sales number come up stronger tomorrow, it will turn the yearly trend line around, completing a reversal pattern, which is extremely significant.

For now, the Dow remains in short and intermediate term bull trend within a primary bear trend.