Dow Near Breakout
The Dow continued into its 4th straight up day today, gaining almost 50 points as investors continue to vote optimistically for the future of the US economy.
FUNAMENTALS
Nothing is more revealing to investor sentiments than where the market goes on the second week of each month. The first week of each month is when all the most important economic numbers are released and the second week is usually a quiet week without any big numbers on the line, allowing investors to really sit back and decide which way to vote. What I call the "Voting Week". Yes, investors have certainly been voting for the Bull camp whole week. Even though gains were not spectacular, they are nice, gradual and steady, the way we all like it to be. The continued weakening of the Dollar and the rise of Gold this year so far seems to set the stage for the next round of inflation worries in the near future. Indeed, this is an extremely tricky thing to balance out. We won't want inflation to hit before the job market recovers and we won't want the recovery in the market to end prematurely as well.
TECHNICALS
The Dow is now into that same 9500 resistance zone that it was in late August but this time round, it is a long way from being short term overbought and short term bullish momentum is also rising. When the Dow last visited this level, it was exhausted like an old man pulling a bullock cart. It was short term overbought with short term bearish momentum rising, hence the lack of strength in breaking that level. This time round, the bearish divergence formed last week doesn't seem to be exerting any bearish influence at all and odds now favor the Dow making a decisive topside breakout within these few trading days. If the Dow overcomes the 9500 resistance zone, its next challenge would be the 10,000 points psychological level where we should see heavy profit taking prior to that. So far, the short term bullish trades that our Star Trading System have produced has done quite well and would certainly reach our profit taking points should the Dow breaks out.
For now, the Dow remains in all out bull trend.
FUNAMENTALS
Nothing is more revealing to investor sentiments than where the market goes on the second week of each month. The first week of each month is when all the most important economic numbers are released and the second week is usually a quiet week without any big numbers on the line, allowing investors to really sit back and decide which way to vote. What I call the "Voting Week". Yes, investors have certainly been voting for the Bull camp whole week. Even though gains were not spectacular, they are nice, gradual and steady, the way we all like it to be. The continued weakening of the Dollar and the rise of Gold this year so far seems to set the stage for the next round of inflation worries in the near future. Indeed, this is an extremely tricky thing to balance out. We won't want inflation to hit before the job market recovers and we won't want the recovery in the market to end prematurely as well.
TECHNICALS
The Dow is now into that same 9500 resistance zone that it was in late August but this time round, it is a long way from being short term overbought and short term bullish momentum is also rising. When the Dow last visited this level, it was exhausted like an old man pulling a bullock cart. It was short term overbought with short term bearish momentum rising, hence the lack of strength in breaking that level. This time round, the bearish divergence formed last week doesn't seem to be exerting any bearish influence at all and odds now favor the Dow making a decisive topside breakout within these few trading days. If the Dow overcomes the 9500 resistance zone, its next challenge would be the 10,000 points psychological level where we should see heavy profit taking prior to that. So far, the short term bullish trades that our Star Trading System have produced has done quite well and would certainly reach our profit taking points should the Dow breaks out.
For now, the Dow remains in all out bull trend.
Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!
posted by Jason Ng at 8:28 PM
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