Wednesday continued the consolidation from Tuesday – solidifying the tight range marked in the 39 Minute Chart from 25,800 to 26,300. This pattern is quite bullish, indicating a likely move to the top of the range at 27,500. A downside break of this range will mean weakness – and a likely move down to 25,000.
DJIA – 39 Minutes
Looking at the Daily Chart, we see a good case for a continued consolidation in the 25,000 to 27,500 range. There is certainly enough bullish news with a new stimulus and coronavirus breakthrough. So the overall posture is clearly bullish.
Recent 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 potentially breaking the wide range and moving on to 29,500. But the way to play it now is to trade strength and weakness within the 2,500 point range between 25,000 and 27,500.
DJIA – Daily
In the face of terrible economic news, new money pumped into the economy has fueled the current rally. So it clearly is still in a bullish posture. But this is still a news-driven market and has tremendous potential for highly volatile swings, even though today’s action was calm.
We want to continue to watch 25,000 for a potential break if the market pulls back to that level for any reason. But given the pattern from today and yesterday, an upside break is likely – in the absence of any adverse news, of course.