My pattern and momentum work on the 4-hour Dow Diamonds (DIA) price action off of the July 15 low argues that the upleg from the 108.33 low to the 115.65 high (July 21) represents the initial recovery rally leg, and that the weakness into today's low at 113.80 represents a shallow correction of that initial upleg. If my work proves accurate, then current "strength" that is pushing up against the 115.00-115.65 area is the start of a secondary -- and possibly very potent -- upmove that will thrust above the May-July resistance line at 115.50/60 and accelerate to the upside to 117.50 next. At this juncture only a decline that breaks 113.10 will wreck the developing countertrend rally technical set-up.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.