Support lifts Dow back towards 14052

Last weeks trading session racked a gain of +1.77% closing at 13806.

It seems that the Fibonacci 38% level of 13532 has helped the Dow find support and lift it higher. This may also be classified as a potential wave 4 as long as it is not violated. Otherwise, it will simply be registered as a wave a.

For upside moves, we now have to clear 13896 and 14028 to test the big 14052 level. This key resistance level has held the index back for all of 2007, the question is can we overcome the barrier to head higher for year end?

Putting this into perspective, we know that November is the start of a strong season for the index. In fact from the middle of November through to December, the Dow has risen ten out of ten years historically. With this in mind and the fact that the Relative Strength Index has now provided another buy signal, the Dow may now be ready to tackle new highs.

One should be always ready for any surprises to the downside as Oil heads higher and may trip traders up in the blink of an eye. $100 per barrel is not far off and many traders are whispering about inflationary concerns again.

With respect to time windows, we may find that the November 2^nd – 9^th is looking to become invalid as a low turning point and may in fact be a high turning point. Either way, the average true range has increased which means more volatility and is likely to continue through until December before the festive season slows things down.