Dow set to pop the champagne

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What a difference a couple of days can make. Earlier this week we had global inflation concerns, with a tightening from China weighing on markets. This was followed by growing sovereign concerns on restructure talk in Europe’s periphery and S&P’s downgrade to the outlook for the US’s sovereign debt rating. While these fundamentals are still ever present, which was evident overnight by the sharp move wider in bond spreads for Europe’s periphery, markets, with thin volume, are clearly trading in the here and now.

Another round of earnings reports, which in general were better than expected, with numerous upgrades to profit outlooks, along with some ‘positive’ data with trade thin going into the Easter long weekend and it was a perfect recipe for a strong rally.

However the Dow pulled up smack on the short term trend line from the February high and failed to hold above it all session. With US futures up after the bell there is a good chance we see a break above this tonight while any move to the downside is likely to find support in the short run.

If we look at a longer term chart we can see a very strong and clear uptrend since the lows back in March 2009. This remains the predominant trend for iteis in the United States and it would take a mighty big pullback to threaten/break this trend. But this is the one to watch for a big move to the downside when it comes, which of course, it will.