The Dow blew past a major midpoint resistance at 15312 in mid-September with such force that we might have thought its ‘D’ sibling at 15684 was all but certain to be reached. Instead, the rally died 155 points shy of the target, then turned south with such a vengeance that the point ‘A’ low is now in danger of being breached. This price action is most unusual, given the ease with which bulls conquered the midpoint resistance in the first place. Now, my hunch is that ‘A’ will in fact be breached but that the market will recover to hit a new all-time high. I base this scenario on the likelihood that the political wrangling on Capitol Hill will eventually quiet down, but not before things get worse as the debt-ceiling deadline approaches.
