Stock Market Analysis

Sunday, March 07, 2010

Bull Returns!

What a week it was last week as the US market resumes its intermediate and primary bull trend as I have expected. That's right, I never thought the market is going to collaspe back into a bear trend because the signs of recovery is sure and clear. There was the peak unemployment reversal and there was the Primary Bull Trend established by the Dow theory. When the signs are this clear, I never let fear and doubt get in the way.

Last Friday's unemployment rate, although not amazing, was certainly surprising, resulting in the huge rally in the market. Investors have been expecting a slightly higher unemployment rate due to all the job related data that have been released so far. However, unemployment rate remained resilient and stayed at 9.7%. This goes to show again why, unlike the ISM index, there are no officially recognized leading indicators for unemployment rate. All the other data such as ADP report and jobless claims might give an indication on how things are in the economy but they definitely do not directly lead the official unemployment rate data. OK, lets not go into conspiracy theories here.

The Dow rallied a huge 122 points last Friday alone, closing the week up by a total of 240 points or 2.33%. Last Friday's rally is so big that this week is most probably going to be mostly sideways in order to digest away some short term overbought sentiment.

For now, the Dow is in all out Bull Trend.

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