Today the Dow-Jones Industrial Average had a very good day, rising 135 points. Support at the 200-day MA has held.
IF $INDU is to keep rising, how high is it likely to go in the near term? To answer this, the Fibonacci retracment tool from StockCharts.com was used. The next target range is a 38.2% retracement, which occurs at 10,625 (see chart above). This is just below the 50-day MA at 10,660. After that, the target is 50% retracement at around 10,700.
Will the stock market resume an upward trend? To answer this, it will be necessary to also factor in economic data and trends. To the extent that inflation rises (the GDP consumption price deflator was revised upward in today's release) and this passes through to input costs, the profitability of production will be adversely affected. In that situation, what we witnessed today is merely an oversold bounce.
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