Dow Jones 30
The Dow Jones 30 initially tried to rally during the trading session on Tuesday but found itself a bit overextended. This makes sense, we have gone straight up in the air over the last month, and therefore we need to see some type of pullback to offer value for traders. I think that the market will eventually find value underneath, so if you are patient enough, you should be able to profit from the value that would be offered underneath. I believe that the 25,000 level is now the “floor” in the market, and I think that the markets will respect that level if we pull back. I would be surprised if we got that low, but certainly that would be my line in the sand. Longer-term, I believe that these dips will be looked at in the past as value opportunities, as the US stock market has been so strong.
The NASDAQ 100 has rallied a bit during the trading session on Tuesday, reaching towards the 7000 handle above. That is a large, round, psychologically significant number. That of course is a target, and I believe that a pullback will more than likely offer value that people are willing to take advantage of. The NASDAQ 100 is getting a bit overstretched though, so I would like to see pullbacks to offer opportunities to get long. If we break above the 7000 handle, we could go a lot higher, and I expect that to happen eventually. However, the market is getting a bit parabolic, especially since the New Year’s celebrations.
I believe that the 6500-level underneath is an absolute “floor” in the market, and therefore it’s not until we break down below there that I would be concerned about the uptrend.