The DOW has moved into a Bull Flag chart pattern and is having difficulty punching through the 8200-8500 level.  The key breakout will be the swing high from 4/17 at 8191.  We need to get through that area with conviction as evidenced by increased volume.  When that happens, our first target will be the swing high from 2/9 at 8315 and then the swing high from 1/28 at 8406.  The ascending channel has flattened and I am less bullish until the market reestablishes its’ direction.  That means that some scaling out may be in order.  If we break the aforementioned highs, you can get longer once again.

Key areas of support are the bottom of the flag at 7792 and 7750.  If those levels are broken to the downside, we could retest 7449.

No market can continue the parabolic move that we have had since early March.  It is healthy that we pause and go sideways.  I still feel that we have more to go to the upside.  However, it is always prudent to make an unrealized gain, a realized gain before giving it back to the market.  It is ok to take some off the table when you have profit.

The SPX is very similar to the DOW in that we have some short term resistance that must be breached in order to continue the ascent.  The swing high from Friday 4/17 at 876 is the first target, then the Double Top from 1/28 and 2/9 at 878 and 875 respectively.  If those levels are broken then we could move to 944.  Both the DOW and the SPX have formed a “J Hook” type pattern in this past week and that is a bullish set up for a breakout above the high posted on Friday 4/17.  Be ready for that move as I feel that it is likely to occur.

The COMPQ has continued to lead the way as I projected.  The next stop is the swing high from 11/04 at 1786.

Monday, the DOW sank 290 points as concerns about Bank stability surfaced amidst negative analyst comments on BAC and C.

The Market recovered Tuesday as IBM and TXN surprised in their earnings despite continuing concerns regarding Bank stability.  The DOW finished higher by 128 points.

Wednesday was volatile as the Market made a valiant attempt to close in the green on positive housing news, but it finally succumbed to a loss by the close as the DOW finished lower by 83 points.

Thursday was a ‘Tug of War’ between the Bears and the Bulls.  Jobs data was squarely in the Bears camp as well as disappointing housing numbers from the NAR.  The bulls countered with positive earnings from the likes of AAPL and EBAY as well as some financial stocks.  The Bulls eked out a win as the DOW closed higher by 70 points.

Friday saw the Market up on positive earnings from AXP, F and AMZN.  Durable Goods and New Home Sales were ‘less bad’.    The criterion for the ‘Bank Stress Test’ was unveiled as well.  The DOW finished higher by 119 points. 

Week over week, the DOW was off 55, the SPX down 4 and the COMPQ better by 21.

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