The Dow is Blasting Off – Where Does it Go From Here?

Another day, another big move on the Dow 30. So with the broad markets going to “infinity and beyond”, where does it go now?

Before we get to that, lets see where we stand at this point.

With today’s strong move, the Dow has now broken resistance established in late 2019. We talked about the potential of this move in a recent post. However, we didn’t expect it to happen this quickly!

So where do we go from here? Well, obviously we have potential resistance at the all-time high around 29500. This was established in February, right before the big selloff.

Another sign that we might be heading to that level is the consolidation target. Consolidation targets are measured by looking at the distance from the low to the middle of a consolidation range.

The image above shows how a consolidation target is measured. So if we take that same distance from the middle of the consolidation and extrapolate it, we can determine a consolidation target.

We simply copied and pasted the same measurement. But this time we started at the middle of the consolidation. This provides our consolidation target, and it almost perfectly aligns with the high established in February.

So it looks like the Dow is head to 29500, right? Not so fast though. We saw a slight uptick on the VIX today. Click here to learn more about the VIX. But this means that put positions are being bought. Which really means that investors and, more importantly, institutions are questioning the continuation of this rally.

In summary, the Dow is a raging bull and seems poised to gain another 2000 points. But be cautious. Protective positions are being bought and we may see this locomotive lose some steam in the short term.

Jeff Drake
True Edge Trading