After bouncing off the 10300 support level and rallying almost as high as 10500, the Dow Jones now looks to be currently trading in a minor uptrend within the major uptrend. The Dow Jones will now be a HOLD as long as this minor uptrend persists, whose support level is indicated by the middle line in the chart. A fall below this middle support line would then give us a SELL SIGNAL. However, the Dow Jones still has relatively good support within each 100 points fall at 10200, 10100, and 10000. Even with a SELL SIGNAL, all this would suggest is to start taking your profits from long positions. There are very little to no opportunities on the short side. What I have concluded is that within a major uptrend it is too risky to take short position, because obviously the major tendency is to go up. It's not worth taking the risk of short position to achieve potential minor returns of around -7% on the pull back, assuming you take it at the right time. The best thing would be to wait for a bounce back up and thus a BUY SIGNAL to then get back. As the Dow Jones continues strongly higher, you should hold on while locking in gains at the same time through trailing or simple stop loss orders. For tomorrow, you can expect perhaps a small pullback within this minor up trend. However, if the Dow Jones moves again strongly higher around let's say 10600, this would possibly be a STRONG BUY signal, but a very cautious one . What I fear from this rally, is seeing it followed by a sharp fall thereafter. For now you should HOLD on, and even if there is a bit of euphoria in the market, as long as it goes up you should stay in, but always protect yourself with stop loss orders. If you want a very good hint to somewhat have an idea whether the market will be up or not in the following session, you should look at the GOLD futures which is mostly driving this market higher. I have found lately that the GOLD futures seem much more predictive than the market futures because GOLD has been very positively correlated to the market in general. The reason is that when GOLD goes up this simply means that the US Dollar is down and therefore the market has to go up to compensate for the lower valued US dollar. You can check out streaming GOLD futures in the following site 24/7: http://www.usagold.com/live.html. After seeing the GOLD futures up strong last night over $1160, I was very confident in seeing the Dow Jones or the market in general move strongly higher today.
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