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After a number of failed attempts to gain any traction above this key level, I noted the pullbacks had recently become less determined; a profile that typically signals a breakout is imminent. This increasingly likely outcome was behind my recommendation last week to buy the Dow Jones on its very next break above 16,559. This advice has now been triggered, and for the first time since last November, long positions are again in place.
Although we are only in the clear by some 150 points, it appears a new and higher trading range is established. There is no obvious resistance now until twin percentages align at 17,778, so the initial advance could be quite aggressive indeed. A move to this level would complete a 1000% rise from the major low in October 1987, along with a 175% rise from the unique low in March 2009. The 1063 points required to fulfill this upside target equates to a further advance of 6.36%.
A fall beneath 16,175 would be the trigger to confirm this fresh breakout has been aborted.
Recommendation: buy or stay long. Target 17,778. Stop-losses can be activated on momentum below 16,175.