The bulls put up a nice show on Thursday. The Dow had surged to a high of over 170 points before retreating to 85 points upon closing. What it means is that the markets are indeed in bullish mode but very cautious. It is not surprising for the markets to behave this way as there is simply too much negative news surfacing in the past few days. New home sales had tumbled to 16-year low, oil price reached $119 per barrel, food is in short supply, and rice price has reached all time high. These events have long-term effect on the world economy. Indeed, the picture doesn’t look rosy in the near future.

The markets could have been stronger and paved the way for further rise for tomorrow if they could close with a higher gain, say 150 points. Although it does not mean it is no longer bullish, it just created some doubts and anxieties in the markets. Let see what will happen when the markets open.

DJIA Daily Chart

Resistance remains at 13150 region. The major support is 12400. Since this is a bullish market, selling Bull Put below 12400 should safe and logical.

S&P Daily Chart

S&P chart shows similar pattern as the Dow’s.

STOCKS TO WATCH:
AIG, MER for bullish breakout.

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