From yesterday, “I am expecting a pull-back this week, and today’s action indicates that to be a likely event tomorrow. If that does happen, it could be another buy opportunity on the way to 29,500, provided we don’t fill the Gap and drop through 26,250.”
The weakness that entered the market Wednesday was expected and orderly (no panic sell-offs), which tells me support will come in just below the Gap around 26,000 so it can continue its climb. A drop through that level should be met with caution.
DJIA – 39 Minutes
The Daily Chart continues to show the Consolidation Target of 29,500. As a result of recent bullishness, I could see a case for holding Long Positions all the way down to 24,800. But for short term trading, the 26,000 level is more important. As the Dow approaches this level, look for strength to come in. That will be the new “fulcrum” in this market.
DJIA – Daily
Clearly, the market is ready for a rest. But from all the evidence in the chart, I think it’s prudent to stay long and watch the support levels drawn in the 39 Minute Chart first, then the Daily Chart. We know that at some point, economics cannot be ignored; but the market seems quite content doing that – at least for now. The overall bullish sentiment is clear and obvious.
However, no market can go straight up. There are always retracements. Watch the support level just below the Gap (26,000) for an indication of unusual weakness. If it’s there, that could be the start of a major correction but from the bullishness of the past week that seems unlikely – unless significant news enters the market that creates fear. It’s a news-driven market and we need to keep watching for a change in sentiment.