Although a gain of 4% is not a huge amount, but the manner how this gains was attained increases the odd of a short term pull back. It would not be unexpected to see a modest short term pull back in the amount of 1-2%, which will take the index down to test the support level near the 1960s area. The intermediate term still remain to be up with a near term target somewhere in the 2030 region where the upper trend line of a rising price channel will serve as potential resistance.
(click on the chart to enlarge)
The Dow Jones Industrial failed to make a new all time high along with the SP500, but the bias on this index remains to be up and it is a matter of when it will make a new all time high as the market does not top until the DJIA top. Although the index has moved back above 17,000 but do expect it to chop around this level a bit longer before it makes its surge to a new high.
The Nasdaq continues to move closer to its glory day (bubble day) of the dot com euphoria. It is back in the level where it was nearly 14 years ago in September 2000.
The under performer remain to be the Russell 2000, but the recent price actions indicate a bias toward the upside. Until this index has rolled over and broken major support level near 1082, the longer time frame uptrend still remains intact.
The Advance/Decline line for the NYSE did confirm the SP500 new high, which is an improvement. But other breadth indicators are not showing much improvement. And as the Nasdaq is making a new 14 years high, its Advance/Decline is still relatively low compare to its peak level.
Although the near term bias indicating there are higher highs to be made, but one must be cautious of the possibility this could be the last dance before the music stop. Therefore, one should not get carry away by the possible near term upward move. Once the music stop, everyone will try to exit all at once and the initial drop could be violent. Always trade your plan and manage your risk. And be mindful that price target is only that; a target, not an objective.
