The futures pushed to the very top of a range where we might have expected considerable resistance. Now, if they don’t retreat precipitously on Monday from their highs, look for the rally to continue to at least 2910.00 (see inset). That would equate to a Dow rally of about 300 points. However, it would also fall at least 250 points shy of the 27251 target we’ve been using to stay confidently on the right side of a trend that has gone on for far too long without correcting. The bullish pattern looks straightforward and reliable, but I am not recommending shorting its target unless you’ve racked up at least 5-10 points of profits on the way up. _______ UPDATE (Jan 29, 7:59 p.m.): The futures did indeed retreat, although we’ll need to see quite a bit more than the 23-point drop that has occurred so far before we blow taps for the nine-year-old bull market. In fact, the decline has yet to surpass even a single prior low on the hourly chart, let alone the two we require to signal the creation of a bearish impulse leg. That would take a print at 2822.50. I expect index futures to fall at least somewhat overnight and to open weak, but it’s anyone’s guess whether the buy-the-dips crowd will step in around mid-morning if stocks get hit badly, since old habits die hard. In any case, I’d suggest watching from the sidelines.
