Range Bound; A News-Driven Market
Monday’s market held at the (now clear) 25,000 support level and pushed up towards the top of a new channel with a high at 25,800. This is a good sign that the market could push back into the range marked on the Daily Chart. However, the market is going sideways at the low end of the range. So it is very important to watch the 24,800 level for a break, which would indicate severe weakness.
DJIA – 39 Minutes
We easily could hold in the wide trading range as the Fed does everything it can to prop up this market. We were looking at a consolidation target in the Daily Chart of 29,500. This past week’s market action tells us this is now very unlikely, because we have pulled back enough to cause concern and hesitation among the bulls.
DJIA – Daily
The big lesson from the March rally was “Don’t fight the Fed.” In the face of terrible economic news, money pumped into the economy fueled the rally.
Today, we see news about a potentially enormous new stimulus on the near horizon. As this news plays out, it will pretty much drive the market as it has in the past few months. However, the levels we are marking are still quite valid – a break of 25,000 will be very negative and an upside break of 25,800 will be a good sign of a push towards the top of the recent range. We know one thing – the volatility in this market isn’t going away any time soon.