From TC2000: What Does the Dow 11,000 Breakout Change?
The Dow breakout at 11,000, which is a breakout above a line of tops extending back six and a half months, does not change the need for a correction in the Dow. It changes something much more important. It changes the assumed direction of the primary trend. Before this we couldn't be reasonably confident that the March low would hold on a pullback. We couldn't be sure that what might have appeared to be a needed correction wouldn't develop into another leg down in a bear market. Although nothing in the market can ever be ruled out as a certainty, the odds now strongly favor the assumption that the bottom has been seen. The correction, when it comes, will likely retrace between a third and two-thirds of the advance since March. Of course, at this point we don't know where the peak of this advance will be, so we can't start measuring. We don't need to know. It will be plain enough when it happens. This is very good news indeed.
The S&P-500 also broke a descending channel. Please refer to the paperclip chart with the Note. Two-hundred-twenty-four industry groups advanced today, compared to only 14 declines. Which pretty much sums up the kind of day it was. Strong and broad in all categories. Volume was heavy. Twenty-nine of the Dow stocks advanced, 94 of the Nasdaq 100, 453 of the S&P 500. Thirty-three of our thirty-four tech stocks advanced. We keep a private list of 12 bellwethers (don't ask for the list). All 12 were up. |
