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July 25, 2005
Dow Underperforming
It looks like surge and consolidate again for the Dow. Notice that the average also surged and consolidated in May. The breakout at 10600 failed to hold, but the average rebounded in July and is trading above its June high.
Despite this rebound, the Dow is underperforming the other major indices. The S&P SmallCap Index (SML), S&P MidCap Index (MID), S&P 500 and Nasdaq are all trading above their March highs, but the Dow has yet to better this high.
For now, the trendline break and higher high are bullish. As such, I would expect the Dow to work its way towards 10800. The consolidation lows hold the key. A move below 10550 would signal a failure and call for a pullback to the lower trendline extending up from mid April.
Posted by Arthur B. Hill at July 25, 2005 09:24 AM