DOW at 10,000...
Here is the technical analysis of DOW surpassing 9700 and there is
chart to be viewed at:
signalwatch.com Market Neutral Trading
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Well, we far surpassed my upside target of 9600 on Friday. In fact, we broke to new highs, and the best part is, we consolidated just below 9700 and held, to rally another 36 points at the close. Digging up any past thoughts about the upward bias of this market is probably counter- productive at this point. But you can see the raw strength in that morning move Friday. It was a doozey!
O.K. So, what now? There were lots of nice Longs Friday (and of course, some nice, selective shorts). Now, the question is, will we continue past 10,000? I think so -- and probably sooner than most would like to admit. But, with that kind of a rally, we are going to be vulnerable to retracements for a few days.
Monday, I would watch for a pull back to 9700. If the Dow holds above 9700, or if it powers up again, that would be a good signal to me that the New Bull has just started flexing its muscles.
Whenever you have meteoric rises like this, you will have resting points (consolidations) along the way. You can watch for these patterns to form, and then trade in the direction of the breakout. Note the consolidation we saw mid-day Friday (marked on the 60 Minute chart). Technically, this pattern implies that we could move up another 150 to 200 points Monday. I know that's hard to believe (for me as well), but the way to use this information is to watch for strength. If the average starts moving hard up again, that distance is the likely top.
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