This morning when the Dow opened, it immediately sold off. It was expected as Mia Kulpa thinks that the Dow is going to make a triangle with back and forth action before going higher. After making a low around 13,900 in the Dow early morning, it continued to trend higher. At close not only the Dow recovered all its losses, but closed higher for the day. The Spx also closed up about a point. The other indexes were not that lucky and had a mixed close. The back and forth movements of the Dow indicate that the pressures to either take profits or to stay long are strong and the direction is murky in the short run. It could be the end of Minor wave 3, which will signal a pull back in minor wave 4 and an extended wave 3. Despite the short term hickups we expect the Minor wave 5 to complete, for which we have a target of 1550-1555 in the SPX. 1502 going forward to 1496 area has a lot of support and any selloff should be contained in that neighborhood.The European markets were higher as well, as the worries about the Spanish and Portuguese default became less pronounced.
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Author Name: Zafar Sheikh