A Wall Of Resistance
Despite what appears
to be a cup-and-handle formation, the Dow (INDU) still can’t get above the
critical 11,000 mark. This level has
acted as major resistance for the Dow since last October and carries several
significant Fibonacci relationships. First,
it is a .618 retracement from the January 2000 high to the October 2000 low.
It is also a .786 retracement from the September 2000 high to the October
2000 low.Â
There’s no telling
how long the Dow will meander in this range. But one thing’s for certain, and
I’m probably not the first to bring it to your attention. Remember, when
patterns become obvious, they tend to do what is not obvious. What does the
world expect? With 61% bulls (see
Kaltbaum’s article), the upside scenario is most suspect. Therefore one
can look for support at the .618 retracement which is approximately 10,734.
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