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Monday, January 28, 2008

How High Could the Dow Bounce?

I've been doing some Fibonacci retracements on the Dow Jones Industrial Average. This system gives you mathematical support and resistance levels.

I'm hearing a lot of bearishness from people I respect. But it wouldn't surprise me to see the Dow rally this week and maybe next week. The question is, how high.

The answer -- from a Fibonacci point of view anyway, depends on where you start.

The really short-term view ...You can see that the Dow has retraced all of its move from April. In this, a very bearish scenario, I'd look for a bounce to 12,810 and then 13,075 at the most. MACD has turned short-term bullish, supporting a rally.

The short-term view ...

Measuring from the start of the Dow's big move in 2006, we are still potentially in a bull market. 12,439 is what to look at next. You'll note that in this time-frame, MACD (momentum) is still bearish.

The long-term view ...The long, LONG term view ...This is just stuff to think about this week.
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