3.23.10 To Break-Out Or Not To Break-0ut That is the Question.
3.23.10 To Break-Out Or Not To Break-0ut That is the Question.
As stated in the 3.9.2010 Analysis
"last 2 sessions on the Dow have been a real tug of war between the bulls and the bears. Last week we said " look for a test of the 10500 area and likely break above". The last 2 sessions have created a possible short term reversal to the current trend but will need to be confirmed in the next coming sessions. The market has been trading in a range and and either needs to break out over 10700 for a continued move to test 11000. ( *see article 2010 What Lies Ahead ) "
We predicted this run in our January forecast, now the question is will we break it in the next 1-2 weeks or will we test it and then retrace, it is our theory 11000 wont break on the first crack in the short term. The short term indicators are getting slightly overbought, but if fueled by a short squeeze the rally can sustain itself and possibly break over 11000 in the next 1-2 weeks. However one has to be on the look out for a short term correction as stated before we can see a dip back to support before we head back up again, though when looking at a medium time frame we are neither over bought or oversold and breaking out of the old trading range. When resistance is broken it becomes a new support.
TO BE A BREAKOUT
We have seen the Dow Jones break the previous top in the 10763 area to close the day @ 10888 area. The 10900 area is the next resistance to break short term if we are going to see a test of the 11000 in the short term. The market is at a pivot point for the short term but a very bullish bias going forward and a new higher trading range will be created. In the short term look for support on the low end to be around 10500, each time that becomes stronger and stronger as it is tested. There is also tremendous support now at the 10250 area which could mark the new low for the new range, though we think we will be lucky to see those levels again in the short term. We might be right on track after some consolidation and testing with our prediction of possible DOW test of 12000 area in 2010. The 11044 area is also could represent yet another area of resistance after 11000.
Though the market has risen, the rally has not been broad base as of yet. In time, the bullish longer term trend will spill over to the rest of the market and we should see most ships rise.
