News in the market bolstered prior gains so the market could consolidate right in the center of the 2,500 point range from 25,000 to 27,500. This flag pattern is bullish, and indicates the market will seek the top of the range over the next few days.
DJIA – 39 Minutes
Looking at the Daily Chart, we see a good case for a continued wide consolidation to form in the 25,000 to 27,500 range. There is certainly enough bullish news with a new stimulus and coronavirus breakthrough. But the forces on the market are intense from several quarters.
Different flavors of news has caused the market to gap up, down, up so it is going to be difficult to read. In the absence of additional news, we are likely going to the top of the range, and then on to 29,500. But the way to play it now is to trade the 2,500 point range that is forming.
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. Now that we have additional news on treatment for the virus, the market is likely to resume its upward climb.
Even though last week’s “bad news” affected the market, we did not see it break 25,000. So it clearly is still in a bullish posture. But it’s still a news-driven market and has tremendous potential for highly volatile swings. We want to continue to watch 25,000 for a potential break, if the market pulls back to that level for any reason.