Stock Market Analysis

Sunday, March 27, 2011

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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