Stock Market Analysis

Wednesday, April 20, 2011

Rebound Completed! Bulls Away!

US market made a surprisingly strong rally as successful retest of short term support along with strong earnings encouraged an avalanche of traders pushing the Dow up by 186 points.

Fundamentals
Many factors came together to make today's extremely strong rally possible; Fantastic earnings on the tech front, better existing home sales, successful retest of short term support as well as a generally happy mood ahead of the Easter weekend. Earnings on the tech front has been extremely strong, leading the way ahead today. Of note were the much better than expected earnings of INTEL and APPLE. We shall have the major economic releases for the week tomorrow ahead of the Easter holiday ; Jobless Claims, Philley Fed and Leading Indicators. All of which shed some light on how the ISM index and Jobs report would turn out in 2 week's time. Another bullish sign today is investors returning to the equities market at last today, raising bond yields across the board. These investors could take over the support from the traders over the next few days until the herd take the market all the way up.

Technicals
As I mentioned to paid subscribers yesterday, we need a successful followup today in order to confirm the rebound and that is exactly what we got today. The Dow completed the same rebound pattern we saw back in December 2010 and all technical indications suggest that the bull is back in strength. If past pattern repeats itself, we should see another few good months before another significant pullback like the one we just had occurs.

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