The break of 23,000 was very quick, happening right at the Open, after which the market pushed back up and continued up all day. Looking at the 15 Minute chart for the session, we see a very wide range formed. This could be the new normal, with Resistance now at 23,800. Given the movement we saw, I will jump out on a limb here and say I do NOT think the 23,800 level is going to be crossed. If it is, the bullish forces in this market will still be there, and with enough support to again push us up into the wide range marked on the Daily chart.
DJIA – 15 Minutes
We can still see the very wide consolidation range formed in the Daily Chart – but there is something else that is now quite visible: A Lower High. So at this point, in addition to very wide intraday swings (a trader’s market) we are going to be watching for a re-test of the now VERY clear 23,000 level, or a breach of 23,800. I think we will be range-bound for a few days. I also think we are going back to 23,000 and will eventually break it. But in any case we now have our two key levels for the next days to week – with explosive move potential between and through them.
DJIA – Daily
We have been talking about deflation, which to me is the biggest negative facing the market right now. Google says, “…deflation discourages many desirable factors in the economy – production, investment, employment and thus economic growth. The major side effect is that it is a disincentive for the producers.”
As the market hit Grand Daddy Support at 23,000 it DID say, “Wow, a great buying opportunity!” Now that it has been bolstered, we will see how that news is digested. Fortunately, the Chart Tells All, and we can continue to use 23,000 for long term Support. I still don’t think closing Long Positions is necessarily justified – unless we solidly break that key level. It’s clearer than ever before that 23,000 is a belwether “line in the sand” for the Dow.