Housing Recovery Starts...

The Dow exploded by 188 points today as existing home sales painted the way ahead for a recovery in the housing market.

The housing market has been down for years and 3 straight months of positive gains do give investors a tremendous amount of confidence going into the economic recovery scenario. Jobless claims also turned in far better today. In fact, the 4 weeks average for jobless claims have been dropping since early this year which definitely suggest that the worst in the economy is over (see Stock Market Calendar).

These optimistic reports encouraged such a spurt of buying which pushed the Dow deeper into the short term overbought scenario. The good thing is, the Dow managed to make a new high which completes the continuation of the intermediate bull trend. Indeed, we are at the early stage of a primary bull market now and i am just waiting for the right moment to call it that. The 200 days moving average will be retested and we could see the pullback as early as tomorrow, so don't be surprised. For now, the Dow remains in short term bull trend, intermediate bull trend and primary bear trend.