The Dow Flies Ahead Of Schedule!

Not that there is any real schedule that the Dow follows but that we expected the Dow to move sideways a little bit more for the weekly 30 MA to catch up before staging a full scale rally. Last week's action came as a bit of a surprise as the Dow gained 295.57 points in all. Such a quick break from the weekly 30MA can be a dangerous thing and can even be a bull trap on its own. Looking back at the most recent time when the Dow rallied way before the weekly 30MA caught up on 10 May, led to an almost immediate correction back down and beyond the weekly 30MA line. So, this is not the time to get overly optimistic yet, especially when we are up against a very heavy weight week (see economic calendar ) with a lot of uncertainty. It is expected to be an extremely volatile week ahead with the PPI, CPI, FOMC and option expiration all lined up in one week.