Cautiousness Ahead of Tomorrow's Releases

The Dow took a small 30 points loss today in a mixed close as investors get cautious ahead of tomorrow's big economic releases.

Fundamentals
Market was cautious today with lots of trading but very little price movement suggesting that the number of bulls and bears are almost par. Investors are clearly cautious today as economic data today turned in pretty mixed as well, casting doubts on tomorrow's heavy weight jobs report and ISM index (see Stock Market Calendar). The slightly higher than expected jobless claims today kicked the market off to a negative open which was quickly brought back into positive territory by a slightly better than expected Chicago PMI, only to be beaten
back down to negative territory on a much worse than expected Factory orders. These mixed economic data resulted in a cautious, mixed trading day with plenty of buying and selling, closing the Dow and S&P500 marginally lower and the NASDAQ marginally higher. Yes, uncertainty was the theme of the day and tomorrow's economic releases might lead to a profit taking/sell off no matter how they turn out since much of the optimism has already been priced in so far.

Technicals
A big volume day with very little range always spells uncertainty. Indeed, with short term bullish momentum continuing to fade, the market can only go further higher from here for the short term if tomorrow's economic data turns out much stronger than expectation. Otherwise, a healthy profit taking pull back should occur at this level to test the 30MA/50MA (which is pretty much at the same level now) before it can proceed higher in a healthy manner.

For now, the Dow remains in a short term bull trend, intermediate bull trend and primary bull trend.
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Rally Continues Despite Disappointing Consumer Confidence

The Dow made yet another significant positive day, closing up by 81 points despite Consumer Confidence plunging.

Fundamentals
Market was ruled by optimism today as late comers to this short rally rushed in today, lifting bond yields across the board and depressing total equities put call ratio strongly in favor of call options trading. All of these happened despite Consumer Confidence making its biggest decline in more than a year. Investor's optimism is reflected also in today's State Street Investor Confidence reading rising to 98.3 from 91.8. As I mentioned earlier this week, we are expecting such pricing in this week running up to the Jobs report and ISM index on Friday, after which profit taking will likely follow resulting in a small gain week.

Technicals
Even though the market continue to trade bullishly, it is actually losing short term bullish momentum on our indicators. Indeed, the Dow would have to pullback a little to retest the daily 30MA or 50MA in order to confirm this recovery to an all out bull trend. As such, we would not be surprised to see a little pullback by the end of the week and would not take new short term bullish positions for now.

For now, the Dow remains in a short term bull trend, intermediate bull trend and primary bull trend.
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Nice Rebound So Far...

The Dow made a critical rebound last week, closing upwards by 3.05% or a huge 362 points on earnings growth and claims that the Japanese nuclear crisis is under control.

The Dow's rebound last week was indeed a critical one in order to preserve the current intermediate bull trend. Looking at the Dow's weekly chart, we can see that it reached down for the 30MA which is intermediate support level, rebounded off the line forming a hammer candlestick, followed by a good followup last week. All in all, this looks like the kind of classic short term pullback and rebound that we saw back in November 2010.

However, lets remember that this market is still very much news driven and can get out of control very quickly if the Japanese nuclear crisis turns out to be much worse than their government made it to sound. Evidences gathered on radiation levels through the weekend seems to paint a less optimistic picture about what's really happening. Lets continue to pray for them.

This week is also a unique week whereby two major economic releases are released on the same day; Jobs Report and ISM index, both on Friday (see Stock Market Calendar). ISM index is reported on the first day of each month and the Jobs report on the first Friday of each month. That is why we are getting both of them reported on the same day this month as first of April is on Friday. As such, we can expect much pricing in this week running up to the reports on Friday. With investors largely optimistic right now and consensus mainly expecting positive outcomes, we could expect a small run up followed by profit taking on Friday itself. As such, this week would like not be an explosive week on a week-on-week basis.

For now, the Dow remains in a short term bull trend, intermediate bull trend and primary bull trend.
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Dow Breaks Out!

The Dow made a critical bullish breakout today, gaining 84 points despite mixed economic numbers and world turbulence.

Fundamentals
The Dow gained 84 points today even though Durable Goods orders came in pretty dismal and jobless claims mostly inline with expectations. Indeed, it is
baffling to see the market being so strong all week under such weak short term fundamentals. In fact, today's move is supported by bond yields rising
across the board as investors rush back into the equities market. All in all it seems like bargain hunters have managed to convince investors to join
into the fray despite what is happening in the world and in the economy now.

Technicals
Yes, what happens in the world can sometimes be different from what investors and traders actually interpret and do. This is what makes technical analysis
so powerful, cutting through the noise and look at what investors and traders are actually doing. The Dow made a critical breakout today, rising and closing
above its 30MA. This puts the Dow back above its 50MA and 30MA and back into a short term bull trend. Short term bullish momentum is still rising and
the Dow is still not yet short term overbought. The Dow may have to test the 30MA a bit more over the next few days but nothing in the technicals suggest that
this isn't what it looks like, a reversal out of a short term correction the kind we saw back in November 2010.

For now, the Dow turns a short term bull trend, intermediate bull trend and primary bull trend.
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Bargain Hunting Declines...

The Dow lost a marginal 17 points today as higher oil price puts pressure on the market.

Fundamentals
The Dow lost some ground today as short term profit taking on higher oil price pushed back bargain hunters. Today's a low volume trading day as bargain
hunting declined after the big 3 days rebound. World events are still uncertain in the short term and actions taken in Libya only serve to push oil prices
higher for the short term. Higher oil price when the market is already under pressure is never a good thing.

Technicals
The Dow made a sideways day today at its 50MA. As I mentioned to paid subscribers yesterday, the 50MA is a critical level to break if the bull trend has
any hope of resuming. Today's market action revealed significant loss of buying interest at this level, confirming it as a resistance level. If bargain
hunters are discouraged within the next few days and sell off, the Dow could sink into an intermediate bear trend. For now, it can still go either way
so it is still not the time to take directional bets yet unless you are a soothsayer.

For now, the Dow remains in a short term bear trend, intermediate bull trend and primary bull trend.
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Bull Trap In The Making?

The Dow lost 1.54% or 185 points last week mainly on uncertainty surrounding the Japanese Nuclear Crisis.

Last week was certainly a volatile week with spikes in volatility reflected in the VIX along with
Quadruple Witching on Friday. There was obvious bargain hunting going on in the market
last Thursday and Friday as the Dow retook 245 points over those two days as traders speculate on a resolution of the Japanese nuclear crisis, which
came to be through the weekend.

The worse for the nuclear crisis may be over now since temparatures are below boiling point but the weekend also saw the involvement of western powers into
the Libyan crisis which will certainly lead to higher oil price and pressure on the stock market. As such, it is still going to be a volatile week ahead as
investors decide which piece of news to give priority.

So far, the short term bear trend continues to be intact despite the two days rally and how the market do this week will have an impact on where it will
head into the intermediate trend next.
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Bargin Hunters Step In

The Dow gains 161 points today as bargain hunters stepped into the beaten down market.

Fundamentals
Even though Asia closed red across the board today, the US market was ready to open much higher as index futures pointed higher way before market opening.
This happened even before the better than expected Jobless Claims and Philley Fed are announced, making today's move look more like bargain hunting. The
nuclear situation in Japan and the Libyan Crisis is still far from over and there is really no credible stimulus to explain today's seeming bullishness, as such,
caution is advised. Tomorrow's Quadruple Witching will see a spike in market volatility
and might even lead to some selloff as investors take a defensive stance ahead of an extremely uncertain weekend.

Technicals
Even though the Dow made a strong day today, it merely traded within the trading range of yesterday's drop which makes it more of a sideways day than a bullish one.
In fact, this looks like one of those bull traps that every bear trend contains and I would be cautious with interpreting it too positively. Bear momentum
continues to rise on our short term momentum indicators even though the market closed upwards today and total equities put call ratio continue to incline
towards put options trading.

For now, the Dow remains in a short term bear trend, intermediate bull trend and primary bull trend.
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Market Slumps on Japanese Nuclear Worry

The Dow shed another 137 points today as Asian market comes under heavy pressure from the Japanese nuclear crisis.

Fundamentals
Despite a better than expected Empire State Index pointing towards continued economic growth, the US market opened deeply red and closed off its lows in yet another
high volatility day. Pressure came from Asia as the Nikkei225 made the biggest single day drop since 1987. The regional and global effects of the Japanese
nuclear incident is yet unknown, leading to a spike in volatility in the market. The VIX surged over
15% today as traders bet on more volatility. In fact, call options trading on the VIX formed more than two thirds of options trading volume today. Indeed,
as I said in my report to paid subscribers yesterday, this is going to be a week of volatility and depending on how the nuclear incident and the middle east
work out, this could get alot better or worse. Investors continue to rush back into the safety of bonds today as bond yields continue to drop across the board.

Technicals
Indeed, this is a time of extremely volatility and directional risk. The market can literally go anywhere now that it has breached the critical 50MA intermediate support.
As such, this is definitely a time for more volatility based play on delta neutral stance like the
Straddle. Next support level for the Dow is around the 11,500 level.

For now, the Dow turns a short term bear trend, intermediate bull trend and primary bull trend.
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Praying for Japan

Last week was a turbulent week. The Dow retreated 1.03%, S&P500 retreated 1.28% and the Nasdaq composite retreated 2.48% on a week on week basis.

Just when we thought the situation in the Middle East is chaotic enough, Japan got hit by an unfortunate earthquake resulting in a huge tsunami that caused
devastation across the north-eastern region. In fact, a nuclear facility is damaged enough to cause concerns of a meltdown which could affect the country
and the region.

In the face of such turmoil, world markets were largely down last week despite the pullback in oil price. In fact, Asian markets continue to come under pressure
right now, Monday morning in Asia. As such, it is going to be yet another volatile week made more volatile by the Quadruple Witching on Friday.

We continue to pray for the lost and missing in Japan.
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Middle East Boils Up...

The Dow took a hit along with the rest of the world on Middle East turmoil, closing down sharply by 228 points.

Fundamentals
Even though crude oil continued to retreat on short term profit taking, world markets were still hit today as turmoil in the Middle East spreads to Saudi Arabia.
To add fuel to fire, US jobless claims announced today turned in sharply higher than expected, spreading fear throughout the market right off the gate. Investors
rushed back into bonds, depressing bond yields across the board and options traders rushed back into put options, raising the total equities put call ratio
sharply above par. All in all, market was ruled by fear today, perhaps too much fear?

Technicals
The 228 points correction in the Dow was a sharp and unexpected one, bringing the Dow all the way down to its intermediate support level on the daily 50MA.
We definitely hope to see some support around this area especially tomorrow. Like I mentioned to paid subscribers yesterday, this correction may work out
in the same fashion as the one we saw back in November 2010 and back then, the 50MA kept the intermediate bull trend intact. In fact, when total equities
put call ratio spike the way it did today, it usually goes back up the other way the very next day. In fact, index futures are already pointing upwards. The 50MA
support is now critical. Failing at this level could mean a free fall all the way to 11,500 where the intermediate bull trend would really be put to test.

For now, the Dow remains in a short term neutral trend, intermediate bull trend and primary bull trend.
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Large Sideways Movement Today

The Dow closed higher by a huge 124 points today as oil takes a hit.

Fundamentals
US market gained broadly today as oil took a hit despite mixed sales data. Sales data turned in mixed today but that didn't stop investors from buying into the
drop in oil price. Indeed, it has been an oil driven market right now as investor grew sensitive to the effects of oil price on the equities market. In fact,
the Dow had made a positive day on every negative oil day and a negative day on every positive oil day over the past 4 trading days. Investors returned on the
lower oil price in force today, sending bond yields higher across the board. This shows that investors are now eager and willing to re-enter the market despite
significant uncertainties surrounding the Libyan Crisis. Indeed, the economic recovery is so strong and evident now its hard to ignore.

Technicals
Even though the 124 points gain by the Dow looks tempting and encouraging, it is merely a continuation of the current short term neutral trend and changed nothing.
In fact, it continued to trade and close within the trading range of the 3 March rally which sets the range for the current short term neutral trend. However,
significant support is now evident along the 30DMA which does put the probability of a topside breakout higher than a bottomside one.



For now, the Dow remains in a short term neutral trend, intermediate bull trend and primary bull trend.
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Market Sideways Despite Better Economic Data

The Dow closed last week largely sideways, gaining a marginal 0.33% on a week on week basis.

Last week was a week full of positive economic data; Both ISM Index and Unemployment rate beat estimates and continue to sustain the economic recovery.
However, the good performance in the economy was only enough to offset the negativity surrounding the Libyan Crisis and the resulting higher oil prices. As
such, one good day led only to heavy profit taking the next day whole week long. Indeed, the Libyan Crisis had everyone watching oil prices. Higher oil prices
leads to higher energy cost which ultimately dampens economic growth. With Libya's production cut, world oil prices have seen severe volatility last week.
Investors are certainly waiting for OPEC to take actions in order to maintain production but that has yet to happen.

On the technical front, the Dow is certainly oversold on an intermediate basis so a little retreat from this level does still set the stage for the market to go higher
as long as the primary bull trend is intact. Immediate support at about 11,900 with intermediate support at about 11,300.

It is going to be a fairly quiet week ahead just like all second week of the months are with no major economic release.

For now, the Dow remains in short term neutral trend, intermediate bull trend and primary bull trend.