I was expecting a pull-back to form off resistance at 23,800. “In any case we now have our two key levels for the next days to week – 23,800 up and 23,000 down – with explosive move potential between and through them.” Well, explosive is hardly the word for it. A very strong gap open was followed by solid buying throughout the session, with the only negativity coming in right at the end of the session. So what does this mean?
Word has it that news about improving situations in Europe fueled a new buying spree from overseas investors. Whatever the impetus, the break of 23,800 took us nearly 1,000 points higher – the new reality which the market must digest. In the 15 Minute Chart, I have marked the large gap, which we would call a “Measured Gap” because there was strong follow-through after it formed. If we measure it this way, a target of 25,000 is predicted. We also see new overhead resistance at 24,800.
DJIA – 15 Minutes
The Daily Chart shows the large bar from yesterday and the Broadening Consolidation. So what we have is a very strong move indicating that a push to the top of that formation is in the offing. What I think we have is a very wide range in which pretty much anything can happen. We are now well clear of the Grand Daddy Support Level of 23,000 – and have to see how the market digests yesterday’s bullishness. If it is met with selling (I would expect at last some to be there), the intraday formation after that is key. If the market consolidates here in a tight range, it is likely going higher.
DJIA – Daily
We could see some volatile movement as the realities of the economic situation become more evident. Market participants are looking past the pandemic. If we are truly near the end of lock-down, the key will be timing of the news that has not yet come out on where we really are, economically speaking. And then, there’s the election. Many forces at play. We keep saying The Chart Tells All. Watch 24,800 up and 23,800 down.