The DOW broke through the bottom side of the flag pattern and pierced back through the 200sma on Monday and Tuesday and traded sideways to allow the index to touch the backside of the 200.  Even though price broke the 200, I still consider this to be a retest of the 200.  If the DOW breaks the swing low of 8461 from this past Wednesday, it will likely challenge the 50sma and the bottom of the shelf from most of May at 8221.  Immediate resistance appears to be at 8778 from the swing high on 6/11.  I don’t perceive this to be anything more than a profit taking pullback and then a resumption of the bullish move for a short while longer.

The SPX broke down out of the Bull Flag to form a Rounded Top and successfully retested the 200sma which was expected.  The 200 and 50sma are converging to form formidable support at 900.  Volume picked up on Friday’s session due mostly to Quad Witching.  We have a bullish stochastics crossover on the bounce off of Wednesday’s low.  This is nothing more than a profit taking pullback and we should rise once again to take another shot at the 956 level.

The COMPQ has led the way and will likely continue to be the leader of the pack.  We currently have an inverted cup and handle.  Key support on the chart pattern is the near lip of the cup at 1785.  We also have the recent gap from 5/29 and 6/1 which should also serve as strong support.  The 50sma resides at 1740 and is rising which should also act as solid support.  The immediate breakout level is at 1880 and then the bottom side of the gap at 1905 from 10/3/2008.  Again, I feel that we will continue to push higher for the short term.

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