SPX and INDU: Are the Bulls Bored Yet?

By Jason Haver  JAN 24, 2013 9:45 AM

The Dow Jones Industrial Average has now reached the target zone of January 3, but as yet there are no signs of a turn.


Yesterday, the Dow Jones Industrial Average (INDEXDJX:.DJI) effectively reached my target of January 3.  The preferred and alternate intermediate counts are still both bullish -- though there's one small bear hope still remaining (an ending diagonal, not shown) since the key long-term pivots haven't been crossed yet.  Bears would basically have to turn the market more or less immediately in order to pull out a stunning upset, but currently that appears to be low probability. 
As it turns out, my observation on October 8, 2012 of a three-wave rally into the 2012 high, and subsequent expectation that the market would make new highs after the correction, proved to be accurate.

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The long-term chart of INDU notes the next resistance levels.  If bulls can keep pushing a bit farther, they give themselves a shot to run toward the black dashed median line, and potentially as high as the top of the black channel.

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Still no material change in the S&P 500 (INDEXSP:INX), though I presently have some slight concern about the rally from the 1470s being part of an extended fifth wave (black alt: 3 and 4), and INDU has now been added to the markets which have reached my targets, so I continue to feel it's prudent to protect profits.  Beyond that, the market is starting to lull all of us into a bullish stupor -- and when complacency sets in, the market becomes ripe for unexpected corrections.  The blue trend lines would be the first warnings.

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I also still feel that the Philadelphia Bank Index (INDEXDJX:BKX) may provide some clues to the short-term and whether or not to expect a larger correction in the near future. 

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In conclusion, the market is still within a third wave rally, so until it gives some signs of a turn, there's nothing to do but continue to ride the trend.  Trade safe.
No positions in stocks mentioned.

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