Dow Jones Nearing Completion of Snap Back Rally

Let's follow up on our commentary from the 23rd in which I forecasted the potential for a steep selloff to occur in the Dow Jones shortly.  I suggested that this week would have an upward bias due to month end window dressing.

The markets are doing exactly what we expected; slowly grinding higher to test broken support levels.  I mentioned the 12700 to 12750 area as strong resistance.  Today, the DOW hit 12726.66 and stopped like it hit a brick wall and closed 70 points lower. 

Now, I am not suggesting that the rally is over; it could be but I think the market may have one more burst left in it.  Either way, we are not far off.  The next heavy resistance level is at 12800 and if the market gets ambitious, it could run all the way back to approximately 13000 where it created a big gap.  I am not in the camp that the latter will occur.  I am hawking the intraday charts to get a sign of a breakdown.  I will update as I see it.

Window dressing will last until the first of the month so the market may move into the 12800 level by then.  A close below 12442 and the market is toast.