Saturday, June 20, 2015

Is A New All Time High Coming?

Since the DJIA closed at a new all time high of 18,312.40 on 5/19/2015 (detailed in “Suspicious Record High”), it has retreated to close at a pivot low of 17,764.00 on 6/9/2015 before it started the process of reversing from the decline. This recent retracement of 548.40 points equates to a modest 3% pullback on a closing basis. On an intraday basis, it retraced from the 5/19/2015 intraday high of 18,351.40 to the 6/15/2015 intraday low of 17,698.40, a 653 points decline or a decline of 3.6%.

On 6/9/2015, as the DJIA closed at a new pivot low, there was divergence amongst other major market indices. This was the first indication of an end to the recent pullback. The second indication was on 6/15/2015 when the DJIA made a new corrective intraday low with improving market breadth, such as the Advance/Decline made a higher low. Finally, the DJIA made a higher high on 6/18/2015 as it closed above the 6/11/2015 close and a higher low from the 6/15/2015 close. These recent technical behaviors from the market indicate a new upward move has started and the all time high for the DJIA could be in-play.

As always, expect the unexpected. The market will do what it will do and nothing is infallible. Although the technical picture has improved and presented a positive bias, but the market breadth strength is still relatively weak. Until the market breadth has regained its strength, trade defensively as the all time high is only a short distance from the current level.

(click on the chart to enlarge)


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