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Dow Industrials break above 9,105

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The Dow Industrials have broken above our 50% "fitted" retracement level at the 9,105 level today and currently trade 100 points above that level at 9,205. This action will now have bulls targeting the 9,729 level.

Dow Industrials Chart - last nine months

Of the major indexes we follow, we've felt the Dow Industrials (INDU)would be the first market index to show some leadership. After all, this index holds 30 of the largest corporations in America. The bullish action on the break above our 50% retracement level is bullish and bulls now have their eyes set on the 9,729 level as a target. We'll also be watching the falling 50-day MA currently at 9,741 during the next several sessions and weeks as it will undoubtedly be a key level to be monitoring. Bullish traders can be bullish some Dow stocks here, where relative strength is strong or beginning to improve RELATIVE to the index.

S&P 500 Index Chart - last nine months

As the Dow breaks above a level of resistance we wanted to see broken to the upside to indicate strength, we turn our attention to the SPX.X and see if it is confirming. We haven't seen confirmation yet and look for a break above 61.8% retracement before getting further bullish. On October 4th, the SPX traded near the 1,082 for about three hours and then fell from there. Is the second time a charm? Keep an eye on the Dow Industrials. Further strength there could be the "head of the snake" pulling the body (S&P 500) higher.

Jeff Bailey
Senior Market Technician
Option Investor

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