Dow Forecast for 3/31/10

As we approach the end of the first quarter of 2010, it is perhaps instructive to take a look at the weekly DOW chart:
Two things immediately stand out:

1. We have broken out over the previous peak of 10,724 set on 1/11. That level is now support.

2. We are rapidly approaching the resistance line at 11,000 (green line). This is significant both as a psychological level and becasue it represents the floor established in the summer of '08 before the big crash that fall.

Now comes the problem. After today's close of 10,907, we're also real close to the 200 day MA, at 11,133. If the Dow can make it past 11,000 and get to the 200 day MA, we should be good for another leg up. The question now is how much of a barrier will the resistance at 11K be?

Complicating the matter is that tomorrow is the last day of the quarter. One might reasonably expect some window dressing to go on, but that doesn't always materialize. But I also note that the daily Dow is only slightly above the pivot point of 10,887, so there's not much downward tug on that front. And the daily VIX is pretty much in the middle of its recent range on the way down with not much to suggest a reversal there. OTOH, the ES daily chart seems to be getting ready to turn over, having put in a doji yesterday and being down 325 in the overnight so far 2 AM EST).

And on top of that, this is a holiday shortened week.

My best guess is that not much will happen tomorrow. Of course, that's on a technical basis only. If our pal le president du ECB opens his mouth again, or if flying saucers land on Wall St., all bets are off. Right now I'm 26% in cash and have no plans to trade tomorrow. I'll just be watching and waiting to see how the attack on Dow 11K unfolds.