Break out

DOW:  finally a break??

Yesterday's rally may have broken the wedge to the upside.

Now it needs follow through, a failure here would probably mean trading back into the wedge and testing the lows again.  Volatility still persists.

Gut feel:  still didn't seem to be enough pessimism for a bottom - we'll see.
Rallies like yesterday's can be self fulfilling as short covering increases.
The market was DUE a bounce - so expected.

At moment many markets are near resistance.
Good area to try a short - with a tight stop. for a short term trade

If it does follow through on volume, but the dips.
Initial targets:  25300, 25800  - on the upside.

DOW key level 24,000

Watching the DOW - again the markets selling off; The talking heads on CNBC - always bullish - are like deer in the headlights, they do not know what to say or do.

They are still looking for a rally - I think we are getting close but still a final shake out in the cards.  And a key level is 24k.  On the monthly we can see that the steep up trend's lower boundary is at this level (give or take a few hundred points).

DOW MONTHLY

1 . A significant break below 24 k would indicate a large correction is under way

2. a test and hold of this level will more than likely see new highs

Why do I think we may be close to a rally?  Look at the daily chart.

1. There seems to be a positive divergence forming
2. It looks like a falling wedge  Which has bullish implications (click on link for explanation from stockcharts.com)
3.  Falling wedges tend to have a false break out in the direction of the wedge, which if it happens will be the final wash out before a rally