Monday the market continued to show strength, and avoided filling the gap. At this point, with both the Measured Gap and Consolidation predicting a move to 28,000 I think it’s fairly safe to say we will reach that over the next 2 days. Then what?
A pull-back is almost certain to follow reaching this target, which will be another buy opportunity on the way to 29,500. In terms of downside risk, we only have to watch short term support, which is now at the start of the Gap – 26,250
DJIA – 39 Minutes
The Daily Chart continues to show the Consolidation Target of 29,500. In this timeframe, we would be comfortable holding Long Positions all the way down to 24,800. That seems like a long way down but with the bullishness we have seen, a pull-back in this zone should result in a renewed push upwards. Breaking that level would paint a different picture.
DJIA – Daily
From all the evidence, the prudent course of action is to stay long and watch the support levels drawn in the 39 Minute Chart first, then the Daily Chart.
We have every evidence that the market is pushing back to highs. With strong demand and the enormous Fed stimulus, the market should continue pushing higher. We are likely to see a profit-taking correction this week. After that, it will depend on news entering the market. At some point, economics cannot be ignored but the market seems quite content doing that – at least for now.