The euphoria in the US market continues and the DJIA has posted its best gains in quite a while.  But that doesn’t mean that they’re already out of the woods.

The index has surpassed the 50-day moving average at 7559 and has made a support out of it for a few days before moving higher to test the 100-day moving average at 8040.  We expected this earlier since there was a chance that this would happen.  Should the index move past the 100MA, we can expect the DJIA to test the resistance of the trading range at 8335.

The DJIA’s MACD is already bullish and it has shown us a bullish divergence created since October 2008.  This could be a sign that the index could move higher than the expected levels.  But all we can do now is to observe and take those short-term opportunities.

Recommendation: Buy selectively and take profits quickly
Resistance: 8335