Dow at New All-Time Highs...Again!
We examined this chart a couple of times last
week as the DJIA was making new highs at 12,167. At 12,196,
the most recent upleg off of the July 18 low of 10,683 would
equal the exact number of points gained during the prior upleg
from the Oct. '05 low at 10,157 to the May '06 high at 11,670.
The fact that the late Oct. DJIA upleg "failed" to hit the equidistant
target by 29 points (.02% of 1513) certainly should not be held
against the Dow bulls. In the past two sessions they have made up
for it, by rocketing the DJIA to a new all-time high at 12,196.32 so far.
This new high is accompanied by dramatically lower momentum (RSI)
compared with the 10/26 high, and noticeably reduced volume-- two
indications that usually mean that the new high is unsustainable. So
now that the Dow has traveled EXACTLY 1513 points from its 8/18 low,
and now that the July 18th-Nov. 7th advance has met exact equidistance-
albeit accompaned by serious divergences-- let's see if the bulls
can sustain the strength. If NOT, then investors will need
to brace themselves for a 1,000 point decline (the May-July decline
from 11,670 to 10,683 = 987 points), which will point the Blue Chip
index to a target of 11,180. MJP 11/07/06 1:05 PM ET 12,186
