Dow Breaks Out!
The Dow staged a surprisingly strong breakout, gaining 155 points, last Friday as Uncle Ben issued the most optimistic speech on economic outlook since this economic crisis begun.
In fact, Bond Yields rose sharply across the board in response to the higher inflation outlook and the reallocation from bonds back into equities. Put Call Ratio also fell to recently unseen lows as speculators rushed into call options. Short term momentum is once again bullish as the Dow wore off its short term overbought sentiment in the month long neutral trend.
The breakout last Friday was extremely significant in the way volume surged as well. This is the highest trading volume we have seen in a month. It really felt like investors were cheering and celebrating as they welcome the great economic outlook and the coming GDP revision. However, as I always said, a few sideways or downwards day usually follow a strong up day so don't be surprised if it does. It only makes better entry points.
For now, the Dow is in once again in all out bull trend.
In fact, Bond Yields rose sharply across the board in response to the higher inflation outlook and the reallocation from bonds back into equities. Put Call Ratio also fell to recently unseen lows as speculators rushed into call options. Short term momentum is once again bullish as the Dow wore off its short term overbought sentiment in the month long neutral trend.
The breakout last Friday was extremely significant in the way volume surged as well. This is the highest trading volume we have seen in a month. It really felt like investors were cheering and celebrating as they welcome the great economic outlook and the coming GDP revision. However, as I always said, a few sideways or downwards day usually follow a strong up day so don't be surprised if it does. It only makes better entry points.
For now, the Dow is in once again in all out bull trend.
posted by Jason Ng at 6:26 PM
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