We should know within the next week or so whether the nearer
term trend can stay intact, with the crossover at 4,815 to force the issue. This aside, a move to the upper bollinger band may also see a pullback.
Bulls will still be in control with the 78.6% Fibonacci
retracement of 2011 highs at 4,732 to provide some near term support if the
shorter term trend breaks down. A move higher in the coming week looks to set
up a run at 4,900.
On the XJO weekly chart, there appears to be room left in
this current leg up to at least test the 50% retracement at 4,964 of the XJO’s all-time
highs set back in 2007.
Similarly with this chart, up moves may be restricted by the current upper channel
trendline where we could see downside of approximately 250 points back at the
38.2% retracement level.
All in all, there is no reason to think that the current
rally cannot continue to move higher, and until we see some stronger signs of
exhaustion and divergence away from upper channel trendlines, the XJO still has
legs to run further.
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