Let's take a look at what has happened in the last few days.
The DOW has rallied off the bottom strongly after reaching a severely oversold condition.
The daily chart of the DOW is fast approaching an over bought condition. We may still have a few rally days left in the market, but its time to be careful.
The weekly chart of the DOW shows that the DOW has still not broken thru the downtrend line. We are currently sitting at this line. We should know soon whether the market can break thru this downtrend line or be rejected from it. Also, last weeks volume was lower than previous week (granted it was a short week due to the holiday). A rally on lower volume generally does not signal a trend reversal. However, the fact that the market did not sell off after a good week is an encouraging sign for market bulls. Maybe the market is taking a breather for now before testing resistence at 10600 level.
The monthly chart is still indecisive. We will have to wait and see how things play out.
I will continue to hold me cash positions for now and see which way the market will head.
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