Oil declines by $30 from record highs. Other commodity prices moderate. The dollar rallies. The nation records better-than-expected GDP growth in Q2.

All are positive data points that suggest that the U.S. economy, while it's certainly not in the midst of robust growth, has not run totally into a ditch, either.

What do the latest economic data points mean for the Dow Jones Industrial Average, and U.S. stocks, in general, for the next six to nine months? Here's the bullish and bearish cases:

Bullish case: Technical analysts would cite the Dow's close above the 50-day moving average for three consecutive days, the fact that the Dow held support at the 11,000 level, and a series of higher closing highs and higher closing lows in the past two months.

Further, technical analysts would also cite the fact that the Dow has completed the volume-light June-July-August summer season (typically bearish for stocks) during a period of anemic growth (if the U.S. economy isn't already in a recession), without plunging to nerve-wracking lows. True, the Dow fell from about 12,400 in June to 11,000 in July, but technicians would cite the aforementioned positive technicals as an argument that a bottom is in place.

Bearish case: Technical analysts would cite the fact that the Dow, although above the 50-day moving average, nevertheless remains below the 200-day moving average -- the toughest moving average line to break in trading. Also, market 'up days' have lacked sustained buying strength as measured by the MACD Histogram.

Further, and equally important, Dow bears would say that although the Dow has risen from its 11,000 low, the roughly 600-point increase is still well within the range of a correction -- or in this case short-covering -- in a long-term bearish trend. In other words, the Dow's recent rise could be Pyrrhic or false -- a classic example of a 'dead cat bounce.'

Market Analysis: With all due respect to technical analysts and their indicators, the view here argues that investors/ traders should take their cue from the U.S. economy's fundamentals: specifically, corporate profits and job growth. Absent substantial, sustained gains in each, any Dow rally is viewed with skepticism.


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What's your view of the Dow? Is this stock market rally real? Or is it temporary? Let us know what you think.

Many investors use moving averages, and more specifically, moving average "crossovers," where one suddenly starts trading above or below the other, to try and gauge which way a market may be headed.

Among technical analysts, one combination has often been seen as a good pointer to prospective long-term trends.

The bullish version is called a "golden cross." That is when the price of a security rises above its short-term average (traditionally, the 50-day moving average), which is also above its long-term average (traditionally, the 200-day moving average).

Many investors view the 200-day moving average of the price of a stock, commodity, or index as a key long-term technical indicator, and will time their buy and sell decisions based on where the instrument in question is trading relative to this average.

Even some fundamental investors, who normally discount the relevance of technical analysis when it comes to making investing decisions, will pay a measure of attention to the 200-day moving average, for no other reason than that others are doing the same.

As of today, the S&P 500 index is not only approaching its long-term moving average, which is currently at 1449.71, but the benchmark is also testing a one-year uptrend from last July's lows.

While prices may hold, signaling that the near 7% correction from the highs has reached at least a short-term stopping point, it's worth keeping in mind that a clear-cut breakdown from current levels could trigger stop-loss and chart-related selling that turns a temporary pullback into something far more serious.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.