Wall Street remains bullish close to its highest annual levels as investors have been reassured by encouraging economic data in the United States and China last week. However, brokers now seem to lack additional elements to push the markets higher. A slight technical consolidation could take place in the coming sessions.
The Dow Jones continues to be driven by positive indicators for global growth which may increase moderately. Indeed, the strongest contraction in four years in the trade deficit suggests that the U.S. growth for the 4th quarter could be adjusted upwards. At the same time, China's data on foreign trade has a positive effect on investors who considered that the second largest economy could be in a favorable trajectory for the beginning of 2013.
Besides, operators continue to be satisfied with the earnings of American companies. The amazing performance of social network LinkedIn has come to demonstrate that a company from the Internet sector could diversify its revenues beyond advertising. This may open up some interesting horizons for companies in the technology sector.
However, Wall Street has difficulties to continue its rally from January due to lack of new catalysts. A correction could now occur and even be beneficial. U.S. indexes could consolidate before continuing their bullish trend. Furthermore, Wall Street has been more or less in "pause" especially due to a near-zero volatility.
The dynamics of the Dow Jones remains on a strong upward trend in daily data above the 13,800/13,850 level which also refers to the 20-day moving average. After reaching 14 000 points the index could start a necessary consolidation towards 13,610 points, then 13,300 points per extension. A positive reaction could take place to resume the upward movement towards 14000 points and new highs. We await the exit of the trading range (13800-14020 points) to take position using the E-mini DJ future (code : YMXXXX) on the CME futures market.