Wednesday, February 22, 2012

Dow to Pull Back 4 - 5%??

Dow Jones Industrial Average (DJIA) is trying to get above 13,000 on closing basis.
My mind is not set on this milestone, it is meaningless. While the media is hyping the development, traders are to be cautious and consider booking profits and/or going short. I think DJIA will have to pull back before another leg higher can take place.
To add some conviction to my statement above, let’s look at an interesting comparison between DJIA today vs. short-term top made on Nov. 5, 2010. It looks very similar on pattern and percentage basis. That rally resulted in 4.5% pullback.

click on chart to enlarge

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