The Dow Jones Industrial Average gapped down from Friday's close at the start of trading on Sunday. The DJIA closed at 12620 and opened at 12512. During the first hour of trading the low of the day was formed. The low of the day is 12433. Gaps are a continuation signal and a downside gap should be sold short with a stop order placed at the price that the gap would be filled.
The weekend gap occured after a corrective wave that formed between the July 18th bottom and the July 22nd top. The corrective wave is of the zigzag variety. Corrective waves have three waves and move against the trend of one higher degree. The three wave correction up signals that the trend of one higher degree is down.
During the 9am hour the DJIA retested the low of the day and held above the low of the day. A retest of a support level that holds above the support level is an indication of strength. The support level held and so did the 200 hour simple moving average.
On the daily chart we tested the minor support level at the July 18th low. A successful test of this level could clear the way for the market to continue moving higher as both the Dow Theory minor and intermediate trends bullish. My outlook is for continued strength or high prices.