Dow 10,000 is important psychologically. AS are the round numbers, every 500 points in the Dow. Watch those as trading targets.
I have been bullish all year. I really think we need to go up and print the 11,000 in the Dow Cash to see what is really in store for these Markets.
The bearish sentiment is certainly prevalent. That should be enough to fuel a rally.
A rally in the dollar, I think has now been figured into the world’s calculation. Last week’s liquidation of a large European fund which was long crude oil, long gold and short the us dollar is either an abberation or a sign of further things to come.
Money flow is 24hours a day in search of a spread or an arbitrage between two or more contracts which have a relation ship “out of whack”. We will continue, therefore, to have lots of volatility when a trading even results in the computer programs lining up in que to do the same thing.
The point to this is the following: If we can continue to settle above the 10,000 level for the next several weeks, the recent shorts in the market will have to cover. That sheer act of short covering in these thinly traded markets will almost guarentee a rally back through 11,000.
Conversely, a strong push below 9650 opens the door down to the 50% retracement level of 8600 which I have been writing about for the past 3 weeks.
Good Trading
