Dow In Accumulation Mode

Dow managed another triple digit gain last night. The phase chart is indicating “Accumulation” phase with the index now above its 50 day and 200 day moving average respectively.

All eyes will be on the FED. Although the FED is widely expected to leave the rate at current levels, investors will be digesting the FOMC statement to give clues as to where the FED policy might be headed.

The trend is certainly positive at this stage and if the market can maintain its momentum, the 50 day moving average will be set to move above its 200 day moving average, giving what we call a golden cross. That will be good news for the bulls.

S&P500 In Recovery Phase

S&P500 moved back above its 50 day moving average thanks to market strength for the past few days. Initial US jobless claims that were less than expected drove market higher. However there are a number of downside risks and the economy remains fragile at this stage. There seems to be a lack of business, consumer and investor confidence that is needed to push the market higher. Credit growth in the US is still declining and that is limiting economic growth.

The phase chart has endured a bearish attack with the index now in “Recover” phase. The next resistance is at the 200 day moving average at 1115. The index does not seem to have enough momentum to clear its 200 day moving average. The market is likely to trade within range of 1020 and 1120 for the time being