The bulls got another boost from the market today as inflation came in inline with expectations. We also saw a capitulation in the housing development market today as housing start numbers came in lowesst in 17 years! Such mulit-year-low data are what usually precedes a recovery. In fact, these are another 2 reasons to add to my list of signs of the bottom! So, here it is again:
1. Recovering ISM index
2. Gold getting beaten like dogs
3. Consumer Sentiment index collasped (its always grimmest before dawn)
4. Fed bailout of BSC is demostration of their resolve not to allow the financial system to sink.
5. Existing home sales rising suggests possible start of the bottom in housing market.
6. Extremely steep bond yield curve suggests that smart money needs to move back into value stocks soon. (which is already rising as money moved back to equities from bonds)
7. GDP has not gone negative despite widespread speculation on an academic recession.
8. Capitulation in the job market with an 80,000 loss in March.
9. Biggest jump upwards in the Empire State Index in 5 years.
10. Inflation coming in inline with expectations.
11. Capitulation in the housing development market signalled by a 17 years low in housing start number.
TECHNICAL ANALYSIS
The obvious danger here, which those of you reading my blog daily would already know, is the 12750 resistance level for the Dow. The Bear's 12750 defense line has proven so far to be impregnable but let's not forget that the last 3 attempts to break that level, which obviously failed, was made when the Dow was already in short term overbought position! That kind of position simply does not carry the strength to break resistance levels! But now, the Dow has just gotten off its short term oversold position when it is so near to the 12750 level, suggesting that it still does have a lot of juice left for that final push! I am more optimistic than ever, not to mention the profits that I have already starting to collect in my
call options.