Monday’s action once again kept us in the descending flag pattern on the Dow, indicating the ever present prediction of an upside breakout. At the end of the day, it actually did poke through. These lines are never exact, but if we see follow-through Tuesday morning, we will likely ascend into the range over the next few days. From there, we begin watching the upside boundary at 27,600.
DJIA – 39 Minutes
Looking at the Daily Chart, we see a good case for a continued consolidation in the 25,000 to 27,600 range. Overall posture is clearly bullish, and I would expect stocks to push Dow up and down within this range for the next few weeks
The chart outlook clearly suggests a move to 27,600 over the next few days. In the absence of additional negative news, we will then likely break the wide range and move on to 29,500.
Once again, this is a wait and see game in this news-driven market. We have been talking about the push-pull in this market – Fed stimulus on one side, with an entire array of forces on the other, including negative earnings, continued business failure, enormous debt, and uncertainty around the coronavirus outcome, with cases increasing in many parts of the country and world.
I think the Fed has enough firepower to fuel a rally going into November, and many are counting on this. But clearly, with all the uncertainty that exists, we can expect extreme volatility in the coming months. As that plays out, market participants will be watching these support/resistance levels – and reacting to them in the same way they react to news – just more predictably.