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Mike Paulenoff is a 25-year veteran technical strategist with experience at firms including Smith Barney, Harris Upham, and Drexel, Burnham, Lambert. He has been widely quoted and published in CBSMarketWatch, Barron's and Technical Analysis of Stocks & Commodities, among many publications.
He is currently author of MPTrader.com, a real-time diary of his trades and technical analysis of ETFs that track metals, energy commodities, equity indices, international stocks, and other markets. |
Indices Confront Resistance
11/15/2005
The Dow starts the week at 10,686, perched right at the high of the upmove off of the October low at 10,157 and just below a ridge of critical resistance at 10,700/720, which if hurdled should trigger another burst of strength that propels the Industrials towards the May (yearly) high at 10,985.
Key support in the DJIA on any pullback is at 10,600. Of the Dow 30, 11 of its components act impressively and should have considerably more upside: 3M, MO, HD, AXP, C, HP, DD, SBC, GE, MCD and UTX.
Meanwhile, the SPX closed last week higher for the ninth consecutive Friday. More importantly, the price structure is heading quickly for a confrontation with the August-November resistance line, which cuts across the price axis at 1240.74, just 1/2% from where it is trading now.
Let's also notice that our underlying weekly oscillators are in relatively strong, supportive juxtaposition entering the new week. In other words, the SPX should continue higher -- to test and likely hurdle the Aug-Nov resistance line in the hours ahead.
Finally, the big picture of the QQQQ shows last week's upside breakout above its longer-term resistance line (40.00) and follow-through strength that hurdled the prior significant peak at 40.68 from December '04. My work points to still higher price into the 42.20-.50 next target zone, on the way to 43-43.20.
At this juncture, only a decline that breaks and sustains below 39 will compromise last week's upside breakout.
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