After hitting the short term consolidation target Thursday, Friday’s Market experienced the pull-back we were anticipating, the saucer-like action portends more upside going into Monday. Key support is now 24,800. It’s important to look for stocks that are showing the most weakness as the market gives up gains and/or consolidates as possible day-trading Short candidates, as well as those that are powering through to higher ground.
DJIA – 39 Minutes
We nkow the broad consolidation in the Daily chart implies a move to 29,500, which is 2x the distance to the center. This is how consolidations typically work, but sometimes consolidations form exhaustions and break in the opposite direction. Since this one has broken to the upside through 24,800 we must assume it is a continuation move and will head higher.
DJIA – Daily
Clearly, 24,800 is clearly the new Key Support Level. As long as we remain above it, continued accumulation is in order on those stocks that have lagged the general market. From here, continued movement up has to do with how the market perceives risk in the short to medium term.
With 40 million Americans out of work and bankruptcies everywhere, this is a very mixed market with opportunities on both Long and Short sides. Based on this, I expect the general market to move sideways over the next month. Watch 24,800 down, as a break of that level will mean a strong sell-off is likely. Otherwise, accumulate sympathy stocks or those that have lagged the general recovery.