Stocks rebounded for the second week. A surprise rate cut bringing the interest rate below zero from Bank of Japan on Friday boosted the stock market to the upside. Weak fourth quarter US GDP of 0.7% also eased the concern of Fed's raise interstate in the near future. For the week S&P 500 index closed at 1940, up 1.75%, Dow Jones Industrial Average gained 2.32% while NASDAQ composite index increased 0.5%.
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| Weekly chart of S&P 500 index |
After the "Hammer" candle pattern showed up last week in the weekly chart, the S&P 500 index rose higher and seems to be forming a bottom. The optimistic scenario is for the index to form a "W" shape double bottom in the next few weeks and reach the sliding 28 week moving average. Afterwards, whether the index will go higher or lower will depend on the market condition and investor sentiment at that time. The short term resistance and support levels to observe are the 1975 - 2000 resistance level from above and the 1875 support level on the downside..
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