Tuesday the Dow opened higher and continued to rally. We had indicated that the first line of resistance was at 1502-1505 area. When it reached that threshold, profit taking started and investors decided to take profits. It meandered back and forth and then new buying came in. A lot of investors who had been sitting on the sideline thought it was a good opportunity to go long the market and hitch the ride. The market remained in an uptrend and traded as high as 1510, and then the short squeeze play came in and a lot of traders who had shorted the market a day before thinking that uptrend had come to an end, had to jump in and cover their shorts. That took the market even higher and reached the 1515 area.Looking at the short term charts, Mia Kulpa feels that the next line of resistance is at or around 1522-1525 area, and thereafter 1550-1555 will provide some major resistance.Market is overbought, though at closing some of the overbought condition was negated as many who were sitting on profit of over 15 SPX points decided to cash their chips.We are not advising our readers to jump back in. If you are aggressive, then you can buy the SPX at 1508-1510 area with a close stop below 1504. Otherwise a wait and see attitude will be fully justified. We are expecting the Markets to get choppy here and if it is the formation of a triangle, or an extension of Minor wave 3, then it could become even more trickier, as the market could sell off from here and then mount another push towards 1525 area in the SPX

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Author Name: Zafar Sheikh