Housing & Confidence deteriorate

3/25/08

Dow was closed on negative note while S&P, Nasdaq both posted slightly gain today as market absorbed two bad economic data. The Confidence index fell below expectation and reach year 1973 year lows while Housing sales up but with median prices posted signaificant down compare with last year. It gives us that there is long way to reach the bottom. If you are bulls, you might think what can be worst than that? Clearly, I would see three months average of each important economic data to make more reliable judgement call on if we reach the bottom or not. Coming this thursday, our Q4 of 2007 GDP data will be announced and we will see how the economy turned out in the past since this is lagging indicator and it should just give us past performance. The stock market will have limited effect base only on this data if it is much worst than estimate.
Technically, Dow was formed a spin wave candlestick pattern today after few day rally which it means there has some balance between bulls and bears. Tomorrow actor would determine if this rally has any legs to upside til next resistance area 12600 or above 12750.
How to see if market sentiment change, see if market recover intraday lows or gain despite bad ecnomica data and has propel higher if good news come. Or, if market go down even with good news and breakdown rapidly with bad cause. Especially when major indexes meets with important support or resistance level after period of up days or down trend.