Welcome Back from Labor Day!
Welcome back from the Long Weekend!
The Dow did a fantastic rebound off its 30 days moving average last Friday in a continuation of the bull trend. Indeed, markets around the globe was extremely bullish today as G20 ministers continue to stick to an expansion policy.
Fundamental Analysis
Bond yields also shot up across the board as investors rushed back into equities, giving support to last Friday's move. Yes, unemployment rate continues to rise but investors now knew better than to take that as the first indication of recovery. Indeed, unemployment rate could be one of the last things to come back up in this recovery. Its going to be a quiet week ahead without any heavyweight economic numbers so that investors could focus on what all that has happened last week really means. No doubt the world is on the war path to recovery and the fundamentals look far better than they had been the past few years. Yes, what was missing in the past few years prior to the economic crisis was the housing market. Housing market has been in the slump for years and there can be no healthy economy without a healthy housing market. That is what is so different about this recovery. The market would have a much sounder fundamental with the housing market recovering along with the economy.
Technical Analysis
On the technical front, this rebound from the 30 days moving average is extremely significant as that is the short term support level for the Dow's intermediate trend. However, there are a few critical elements missing from last Friday's rally. First of all, volume was seriously lacking. As expected, pre-long-weekend trading tends to be thin and a rally on such thin volume suggests a rally with very soft bones. On top of that, the Dow is short term negatively divergent with RSI. This shows that the short term inclination is still bearish and this single day "rally" needs to be taken with a big pinch of salt.
For now, the Dow remains in all out bull trend.
The Dow did a fantastic rebound off its 30 days moving average last Friday in a continuation of the bull trend. Indeed, markets around the globe was extremely bullish today as G20 ministers continue to stick to an expansion policy.
Fundamental Analysis
Bond yields also shot up across the board as investors rushed back into equities, giving support to last Friday's move. Yes, unemployment rate continues to rise but investors now knew better than to take that as the first indication of recovery. Indeed, unemployment rate could be one of the last things to come back up in this recovery. Its going to be a quiet week ahead without any heavyweight economic numbers so that investors could focus on what all that has happened last week really means. No doubt the world is on the war path to recovery and the fundamentals look far better than they had been the past few years. Yes, what was missing in the past few years prior to the economic crisis was the housing market. Housing market has been in the slump for years and there can be no healthy economy without a healthy housing market. That is what is so different about this recovery. The market would have a much sounder fundamental with the housing market recovering along with the economy.
Technical Analysis
On the technical front, this rebound from the 30 days moving average is extremely significant as that is the short term support level for the Dow's intermediate trend. However, there are a few critical elements missing from last Friday's rally. First of all, volume was seriously lacking. As expected, pre-long-weekend trading tends to be thin and a rally on such thin volume suggests a rally with very soft bones. On top of that, the Dow is short term negatively divergent with RSI. This shows that the short term inclination is still bearish and this single day "rally" needs to be taken with a big pinch of salt.
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 5:28 PM
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