Dow Breaks Out!
The Dow broke out decisively above its 8500 resistance level by 221 points today! Indeed, that rebound off the 30 days moving average along with the rising short term bullish momentum I identified yesterday really did the job.
The Dow broke out as the ISM index beat expectations, proving once again that the US economy is indeed on the war path to recovery. Eventhough the ISM index is still below 50, which still suggest a contracting economy, it has recovered for 5 consecutive months, suggesting that the worst for the economy may be over. In fact, new orders recovered to above 50 for the first time in 17 months. At this point in time, I think we have more than enough data to call an end to the economic crisis and the beginning of the recovery. Sure, there are some giant companies which need to suffer the final blow but that does not stop the economy from recovering as a whole.
The Dow is now at the doorway of its 200 days moving average, which is an extremely important level to break, as I have mentioned before. With volume and short term bullish momentum rising, it may not prove to be any problem at all. The Dow is now once again in short term bull trend, intermediate bull trend within a primary bear trend. Yes, we still need a pullback to verify if it is a bullish reversal in accordance with the Dow Theory.
The Dow broke out as the ISM index beat expectations, proving once again that the US economy is indeed on the war path to recovery. Eventhough the ISM index is still below 50, which still suggest a contracting economy, it has recovered for 5 consecutive months, suggesting that the worst for the economy may be over. In fact, new orders recovered to above 50 for the first time in 17 months. At this point in time, I think we have more than enough data to call an end to the economic crisis and the beginning of the recovery. Sure, there are some giant companies which need to suffer the final blow but that does not stop the economy from recovering as a whole.
The Dow is now at the doorway of its 200 days moving average, which is an extremely important level to break, as I have mentioned before. With volume and short term bullish momentum rising, it may not prove to be any problem at all. The Dow is now once again in short term bull trend, intermediate bull trend within a primary bear trend. Yes, we still need a pullback to verify if it is a bullish reversal in accordance with the Dow Theory.
posted by Jason Ng at 5:44 PM
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