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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. |
Upleg Remains Healthy
01/16/2006
Looking at this week's action on the enclosed weekly chart, we notice that although the SPX pulled back off of its new high at 1294.90 to 1282.78, the correction is barely noticeable. In fact, because the SPX closed above last week's close at 1285.45, according to the weekly chart, we did not have a correction at all!
From an intermediate-term perspective, the SPX uptrend off of the October low and the most recent new upleg off of last week's low at 1245.74 remains intact and very healthy -- and points still higher into my next optimal target zone of 1300 to 1308.
The DJIA violated key intraday support yesterday at 10,992, which has triggered follow-through weakness towards my optimal next target zone of 10,920/00. My near-term work continues to point to more weakness into the 10,900 support area, which should contain the selling pressure from Wednesday's high at 11,046.
However, a break below 10,900 will be problematic from a technical perspective, and will argue that a larger, deeper corrective process is underway that has projections into the 10,800 area for a test of the rising 50-day moving average.
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