Good day! Over the past two weeks the market has shrugged off all the disastrous global news that hit between mid-February and mid-March. This includes the 9.0 earthquake and tsunamis in Japan and its continuing nuclear catastrophe. It has also moved on from a focus on the civil war that has erupted in Libya following the collapse of the ruling government in Tunisia and Egypt with ongoing civil unrest throughout the North African and Middle East regions. The only real change we've seen on these fronts over the past several days is that there has not been much of a change. Perhaps for this reason alone we have seen the market breathe a sigh of relief.
Dow Jones Industrial Average
After striking 100-day moving average support in the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) in mid-March, the market has been in recovery mode. In fact, the pace of the recovery has been quite astounding. On Wednesday the Dow managed to retake the zone of its high-to-date this year and it's done so on momentum that was twice as strong as the overall retracement off those highs. This is one of the reasons I feel that of all the indices, it has the strongest chance of testing a slightly higher high, but we should start to see the pace of the recovery stall as we head into next week.
One thing to be aware of on this recovery is just how light the volume has been. We saw volume spike as the indices struck support earlier this month, but as the market climbed, it had fewer and fewer participants. This is once sign that the current rally off this month's support is nearing an end.
Over the past week the commodities have not even participated in the recovery effort. They has struck resistance at highs last week and have been congesting on lighter volume ever since. These include oil, silver, and gold, which have all gained a lot of focus over the past month. Despite the correction, the bias still remains in favor of the bulls.