Just Above 25,000 Support Level
Friday, the market descended to the bottom of the wide range, and held right at our major support line of 25,000. This makes going into the next week quite a bit easier, as we are essentially in a “Buy Above” and “Sell Below” situation. We want to watch for major strength or weakness entering the market – right at this level.
The Daily Chart continues to show the wide consolidation, with the market resting on 25,000 as mentioned above. There is just enough positive news (new stimulus potential, for one) that the market continues to hold its bullish posture, but that could change with anything new entering the psychology of the market.
Will the Dow go back to the top of its wide range? We are now very close to the critical 24,750 support level. But until that line is broken, the range between 25,000 and 27,600 is still operable. There is a 250 point “grace period” that we are watching between 24,750 and 25,000. What is most important is how strongly the market rallies off 25,000 or breaks through.
Anything can happen in this market. One solid piece of bad news could push us through the 24,750 level and then much lower. Today, we will be watching that critical level for a downside break. It is likely that the Fed will announce some kind of action to keep the market from going through Support. So watch for that kind of news over the next few days.