No negative quarter, avoiding recession again
January to March quarter posted a 0.9% gain in GDP, giving investors the fundamental understanding that textbook recession is out of the picture. It was certain that investors would respond favorably, and they did. The dow was up 52 points to 12,646. This kind of optimism is great for a market that’s been beaten down by high commodity prices and a slowing economy.
Further adding to the good news is the Federal Reserve’s latest credit auction which brought in just $7.2 billion worth of bids for a lot worth $25 Billion. For the first many auctions, the Federal Reserve was getting more bids than what was for auction, even in lots of $50 Billion at a time. Now that the market seems to have sufficient credit, loans should increase, further adding to the US economy.
The Dow as an average looks to be in the middle of top and bottom. The seesaw market of today is giving some investors a frightened look, do we consolidate to 12000 or is the market headed back to 13000 highs on oil news.
On to the technicals of the dow price movements, I think we’re headed for 12000. The price has followed a very strong support/resistance line downward. Though there is no resistance, traders are selling out to the buying strength that exists on one key trend. Moving forward I think we either touch a trend, and then see a buying spree pushing the market back as the fundamentals of oil and GDP data kick in. And remember, we’ve always the economic stimulus package to liven things up a bit.
