The Dow closed slightly negative today by 33 points as sales data disappoints.
Fundamentals
Sales data today turned in worse than expected, resulting in a deep red opening. However, the general sense of optimism in the market continues as investors and traders stepped in almost immediate and took the market off its lows. In fact, the NASDAQ Composite managed to get back into positive territory. This proves that the general sense of optimism in the market is strong enough to hold off or overcome bad news in the market which would otherwise have resulted in a significant down day in a generally pessimistic market. The rest of the week is littered with important economic releases such as Wednesday's FOMC Announcement, Thursday's jobless claims and Leading indicators as well as Friday's GDP. It can be expected that a worse than expected showing would have limited impact on this generally optimistic market while a better than expected number would provide the catalyst needed for the bull market to continue.
Technicals
It is interest to see again and again how fundamentals coincide and support technical predictions. This time round, the disappointment in the sales data coincided with the 12,800 points resistance zone which I have been talking about over the past few days. We could see a breakout over the next few days if economic data continues to do well. However, this up leg is looking more and more overextended and I expect a significant testing of support level (perhaps the 30MA or 50MA, nothing too deep) should a breakout happen over the next few days.
For now, the Dow remains in short term, intermediate term and primary bull trend.
