Dow cash posted a high Thursday at 11,154. Today Friday the 16th, our high in Dow Cash is 11,153. This is shaping up to be a double top on the daily chart. With the news out about Goldman and the Fraud charges could be the catalyst we were looking for to give us a correction. Certainly on the Dow charts, there isn’t good support until 10,700. That would be a 400 point haircut, which I think is a reasonable down draft.
On a technical note, several days ago I wrote about the 11,238 level being a trading target. It represented a 62% retracement of the meltdown which began in 2007.
So we got within 84 points of that target, with our high at 11,154. When I was a kid, i almost had my eye put out by a bottle rocket. It missed and just grazed my ear. Certainly, in horseshoes and bottle rockets, close is close enough, sometimes.
Those of us who were waiting for the exact, perfect 62@ Fibonacci retracement in order to sell may have missed an opportunity.
Longer term, I still think we need to go up and get the full 5,000 point rally. However, on a Friday, after a multi month rally with few breathers, I wouldn’t be surprised to see weak longs who just got long on the pop above 11,000 may have to sit through some pain. Certainly there is not good support until the 10,750- 10,500 support band.