The above chart shows the weekly Dow Jones Industrial Average has successfully broken out of its descending wedge pattern. For weeks the Marketdoc Report has been pointing to the numerous buying opportunities which exist in the market. The market appears ready to challenge its 200-day moving average of 10,477. The strength at which it moves above the 200-day average will determine the strength of the next leg upwards.
The past few weeks have shown another stream of negative news for the market. Most of the news was "old news" such as the situation in Europe, but the perception was extremely negative. Hence, the market sold off. It is highly suspected that investors were short of cash and needed to sell some of their holdings, others were just skittish, and some wanted to take profits. Regardless of the reason, we have seen another classic descending wedge pattern with its subsequent breakout. Selling volume seems to be getting exhausted.
The fundamental news about our domestic economy continues to be relatively good. We are in an early recovery phase. Don't listen to the self-proclaimed experts who keep pointing to unemployment numbers. Unemployment is a LAGGING economic indicator. When a string of unemployment numbers are decreasing is when most investors should be SELLING into rallies. For now, the market appears headed higher. Can something unexpected happen? Of course, including a possible cluster-flop legislation which can come out of Washington at anytime. Washington is our "Sword of Damocles" for this market. For now it seems good that Washington cannot seem to agree on anything for very long.
Note: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment should be reviewed by your own personal investment advisor.
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