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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