(Click to enlarge chart)
The Dow Jones Industrial Index broke out of a large head and shoulders bottom formation on Friday. The measured height of the pattern from the bottom to the neckline is 1018.86 points. The first target is .50*1018.86+12720.56=13230.00. The second target is 1.0*1018.86+12720.56=13739.42. 12720.56 is the breakout point on the neckline as of Friday.
The 50% retracement to the October 2007 high is 12916.46, and the 62% retracement is 13218.93. Friday's high fell just short of the 50% retracement, and failed to breakout above the downtrend line from the October and December highs. The Dow also closed above resistance at the November 2007 low. 13230 is a highly probable target. 13739.42 may not be reached, but 13500 is certainly within reach. A pullback to test the neckline is a good bet.
All systems on the System Tracker are long. This rally may move in fits and starts but with so many long signals firing off, I would be surprised to see it end next week. Nevertheless, price rules over opinions. Trade the price.
May you be successful in your trading efforts this week.
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