The Dow Jones ended flat and this move is seen as a consolidation. The United States indices have moved up quite a bit and they need to pause. That is making the investors a bit nervous and that is the sole reason why the markets have been trading since the past 2 days.

Some of the analysts feel that the market is over bought and it needs to consolidate from here before showing another up ward momentum. They say that the markets will need strong triggers to make it cross its previous highs made in 2008. But, some other analysts argue that the markets are showing signs of stabilization and they will most likely, move higher from here.

The sentiment around the investors is quite optimistic and that will drive the stock markets higher. Barry James, president of James Investment Research in Xenia, Ohio, said, “The sentiment is really, really bullish. That is a little bit of a warning sign to us that we could be more in a topping phase than actually a new bull phase. It would take a lot to really convince everyone that happy days are here, and we can just ride this off into the sunset.”

The data coming out of the United States has been good and that is also improving sentiment amongst these investors. Most of them put out their bullish bets in the markets once the Dow Jones crossed the important resistance of 13500.

Paul Krugman, Nobel prize-winning economist, said, “If the Fed can convince people that it’s going to keep the pedal to the metal…that still has some leverage on the economy. The U.S. economy is recovering but slowly and still experiencing depression conditions. Almost four million workers have been out of work for more than a year…we haven’t had anything like that since the ’30s” [and]… there’s lots of unused capacity…a lot of savings that have nowhere to go.”

Technical Analysis:

The markets are all set to move higher from the current levels. The next important resistance for the Dow Jones is at the 14000 level which is not far away from the point it is trading now. On the down side, there are multiple supports and these will help the index from not falling down.

The first major support is at 13500 and this will continue to act as a strong cushion for the markets going forward. The macro economic data is quite good and that is also helping the markets to move higher. The earnings picture is perfect and most of the blue chip companies in the United States are delivering superb growth.

Tech companies are showing huge positive momentum and they are posting good results for which they are being rewarded. As clarity is being emerged on the economic condition in the U S, the markets are cheering and gradually moving up. Banks are the ones which are lagging behind and if they start to move, then the index will see new highs in the second half of this fiscal year.

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Category: Finances
Keywords: Dow Jones, United States, ASX, Dollar index, Brent Oil, Gold, Caterpillar, Earnings