Will the Dow Make New Highs?

Apr 17, 2007: 8:05 PM CST

The last two times the Dow Index has approached 12,800, it has failed. We had a failure today, as the number served as resistance, but the mere fact that we are testing resistance for a second time might indicate that it will be broken this time. Should the resistance zone (by price) be broken, there will be no above resistance for the price index.

Despite the testing of resistance on the Dow, the S&P 500 index rallied above and broke its most recent high, but has not yet made all time price highs.  The same is true for the Russell 2000 index.

A few charts with minimal annotation:

dow-apr-17.png

S&P 500

spx-apr-17.png

It would be difficult to imagine the indexes going higher without a brief pause or swing low (before moving right back up).  Be conservative about committing new capital where the indexes are at this very moment.  Wait for a slight pullback before entry into new trends.  Odds favor going long (buying) over shorting.

As I warned before, PLEASE do not try to call a top in this market and attempt to short.  That is a very low-odds proposition.  Do not fight the trend no matter what the TV or other bloggers are saying about how the market is about to implode.

Follow price action and stay independent.

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