There Goes One Good Week...

The Dow ended the week strongly last week up by 3.09% as optimistic economic data whole week long was priced in as early as Monday. Indeed, other than unemployment rate, which is expected to be higher anyways, every number pointed towards economic recovery. That could also be why the bond traders jumped in last Friday, raising bond yields across the board (see bond yield curve).

The Dow seemed to be holding up against the 200 days moving average pretty well and is currently slightly above it. However, danger's not over until it breaks out even though the intermediate bull trend still looks strong and within a very stable pattern. Volume is what was lacking from the last few weeks as more and more investors expect the market to pullback. Yes, a pullback is necessary to test the integrity of this intermediate bull trend and to ascertain if this is a bullish reversal we are looking at.

The second full week of each month are usually quiet weeks as investors digest and react to all the heavy weight economic data released during the first week. Investors would continue to focus on the jobless claims number and for confirmation of a bottom. Indeed, jobless claims are already painting a very good picture as the 4 week average corrects back down. My personal opinion is that we are witnessing a bullish reversal in the stock market now and that the worst is over.


Check out my new eBook on Finding High Yield Covered Calls!