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 tdrm 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.