Big expectations can lead to big disappointment
The world's markets are rejoicing over expectations that the ECB and/or the US Fed will announce some kind of stimulus next week. Wednesday will be Fed day and Thurs will be ECB day. The last few days' rally has been great, but we are getting to a point of resistance from a technical oscillator perspective. The calculated score for the 4 hr chart popped two red numbers on the internals with an overall dark-orange score. The daily also turned orange with no pink or red internal numbers. So, based on previous scores, it would be logical to expect 1-2 more days of upward momentum before some kind of minor pullback. This would coincide with the expected Fed / ECB news. Big expectations without a payoff lead to big disappointments.
|DJIA 4 Hr Chart|
|DJIA Daily Chart|
The Slow stochastic on the Daily chart is not as high, and has room to go higher. However, the %B is above the 100% level, indicating that we are at the top of the Bollinger band. We could ride it up, so to speak, but I think some cooling of momentum is in order.
GOOD LUCK NEXT WEEK!