The Dow Jones Industrial Average rebounded off 9936 on 27 Aug 2010, completing a zig-zag correction off 10719 (09 August 2010 high). The subsequent rebound has extended to 11032 (08 October 2010 high) so far, matching an equality target (1.0 X 9614/10719 from 9936). This form of symmetry along with daily bearish RSI divergence (comparing the 21 September and 08 October peaks) suggests corrective consolidation is likely to take hold before resuming the underlying trend upwards. While bulls seek a higher low by 10719, short-term strength towards the YTD high at 11250 (26 April 2010) is viable while the 9-day MA supports. Clearing the yearly peak would risk an extension towards 11454 (1.382 X 9614/10719 from 9936). Meanwhile, a move below 10608 (20 September low/near 38.2% of 9936/11032) would suggest further weakness towards 10480 (15 September 2010 low/near 50% of 9936/11032).
STRATEGY: BUY at 10722, risking 10572, targeting 11250
