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Although there was no follow-on momentum behind the move, I am raising my recommendation to neutral as a result. Short positions should therefore be closed.
The recent profile of the sideways drift just beneath 16,559, and its ongoing refusal to find any traction below my former target of 16,175, lead me to think the Dow’s next significant move will be upwards. Both traders and investors should be fully prepared for a move to a new and higher trading band, and the next target band defined. I have updated today’s chart in readiness, and clearly highlighted the next resistance lines at 17,778. A move to such a level would fulfill a 1000% rise from the major low that followed the 1987 stock market crash.
It appears that each pull-back from 16,559 is progressively less determined. Given this, the next break above 16,559 should be used as the trigger to buy the index outright.
Recommendation: neutral. Buy on the next break above 16,559. The target then becomes 17,778.