The 5,3,3 stochastics are showing a bounce from the 50 level, so back into overbought territory we may go. We held the 50 MA last week ans it looks as if the 20 MA will cross the 50 this week should this rally continue. On pullbacks these as well as many others should be seen as potential support. We are currently running into a long term down trend line, from November of last year, at about 850. This should also serve as psychological resistance as well. Beyond that 875 is next major resistance then we have pretty much clear blue sky to January highs.
On the weekly chart we have yet to even reach overbought territory which I suspect has been a great indicator to keep you in this rally. We also have the 20 MA behind us and the 50 up over 1000. I will be watching these weekly stochastics, looking for an overbought reading, and then a cross below 20. That will be my signal that we potentially are in for a big retracement, possibly 50% of the entire move up. Then I think we will be range bound until "sell in May and go away" kicks it...I think for a change this old adage may prove to be true.
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