Morning Call by Greg Secker

Yesterday the Dow Jones fell sharply and broke through 11,200, then sank to test the 11,100 level, however the index found strength and reversed to rally into the close up 165 points. With the fifty ema resting at around the 11,500 level, a break above this and then sustained movement will be needed to strengthen Bull activity and the potential of a major trend forming above the 11,800 level. This then is the upper breakout level of the wide ranged channel that has formed since the end of July. The lower level is around the 11,000 mark and continued Bear activity may break this for the downtrend to strengthen in that direction. Today with the Retail Sales and Producer Price Index reports out at 1.30 pm British Summer Time, watch for strong reaction to this and look for end of week profit taking to potentially reverse yesterday’s gains if the news is worse than expected. Another cautionary note is that today could see Hurricane Ike come ashore targeted at Houston, Texas – the hub of the Oil industry and the United States’ busiest oil refining area. With oil currently at $101.20, price increases that will then negatively affect the Dow, could also be seen. The FTSE closed down 47 points yesterday at 5318 and with no major market moving news out today on this side of the Atlantic, just as yesterday look to component news and the Dow's movements, coupled with end of week profit taking here, for direction. Gold is currently at $754.90. Have a great day’s trading, a fabulous weekend and I will speak with you on Monday.