DOW surged 1.40% to close at new record high at 37090.24 overnight, after Fed outlined the path for interest rate cuts next year. While some volatility may be expected following this sharp increase, near term outlook will stay bullish as long as 36010.85 support holds. Next near term target is 100% projection of 28660.94 to 34712.28 from 32327.20 at 38378.54.
For the medium term, DOW would be looking at 61.8% projection of 18213.65 (2020 low) to 36952.65 (2022 high) from 28660.94 (2022 low) at 40241.64, which is close to 40k psychological level.
In contrast, 10-year yield lost -0.173 to 4.033, after hitting as low as 4.009, just managed to defend 4% handle. Some support could be seen from current level which is close to 55 W EMA (now at 3.956) and the long term trend line support to bring interim rebound.
However, TNX should have completed the five wave rally from 0.398 (2020 low), and a correction to this up trend is underway. Sustainable support might only be found at 3.253 cluster support level, which is close to 38.2% retracement of 0.398 to 4.997 at 3.240.
