Tuesday, April 24, 2007

Is the Stock Market sinking or flying ?

This week is the last week of April. We'll see whether the Old wall street saying "Buy in April and Go Away in May" will apply to this final week. We already see the "buy in April" part but a significant pullback is yet to happen.

A possible scenario for the Dow is to pullback slightly to around 12.700 and rebound back to test the 13.000 area. But will a pullback ever happen ?

It all depends on the set of heavy weight economic data released this week.

Today we have Consumer Confidence and Existing Home Sales data due. If the existing home sales is bad then coupled with bad new home sales data tomorrow then it will add further pressure toward the slumping housing sector.

Other datas due out this week include: GDP, Employment cost index, Fed's Beige Book and others. If market wants to pullback here, it will find excuse and reasons from those datas.

Other than those datas, several companies will release their earnings report this week. AAPL, MSFT and CVX are the highlight this week. Failure to "impress" the investors coupled with not so great data can be a reason to profit taking in the market.

We are seeing also a negative divergence of price vs RSI and TSV in the Dow weekly chart.

12.890 seems to be a strong support there, so yesterday move was not really significant. Let's see what today brings.

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