We examined this chart of the Dow a couple of times last week as the DJIA was making new highs at 12,167. At 12,196, the most recent upleg off of the July 18 low of 10,683 would equal the exact number of points gained during the prior upleg from the October 2005 low at 10,157 to the May 2006 high at 11,670. The fact that the late October DJIA upleg "failed" to hit the equidistant target by 29 points (.02% of 1513) certainly should not be held against the Dow bulls. In the past two sessions, they have made up for it, by rocketing the DJIA to a new all-time high at 12,196.32 so far. This new high is accompanied by dramatically lower momentum (RSI) compared with the October 26 high, and noticeably reduced volume -- two indications that usually mean that the new high is unsustainable. So now that the Dow has traveled exactly 1513 points from its August 18 low, and now that the July 18-November 7 advance has met exact equidistance -- albeit accompaned by serious divergences -- let's see if the bulls can sustain the strength. If not, then investors will need to brace themselves for a 1,000 point decline (the May-July decline from 11,670 to 10,683 = 987 points), which will point the Blue Chip index to a target of 11,180.

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.