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Monday, December 7, 2009

Dow Jones (DJIA) index chart pattern - Dec 4, '09

The Dow Jones (DJIA) index chart pattern moved all over the place last week. Four days in a row, the index moved above the 10500 level, making a new high of 10549 on Fri, Dec 4 '09. Each time, the bears fought back strongly to force the index down.

The Dow closed only 79 points (less than 1%) higher for the week, and barely 30 points above the crucial level of 10360. The bears seem to be intent on defending the 50% Fibonacci retracement level of the entire bear market fall.

The bulls are equally determined to retain the upper hand, and the 6 months bar chart pattern of the Dow Jones (DJIA) index appears to confirm that:-


The sequence of higher tops and bottoms have been maintained, with the 20 day EMA providing solid support to prop up the index against a vicious bear attack. The high volumes on the last two days of the week indicate strong selling.

The three EMAs are still moving up and the Dow is above them. The bulls continue to take the index upwards on a wave of liquidity and positive sentiment. The fundamentals have a long way to catch up.

Bears will try to regroup, using the weakening technicals. The RSI is just above the 50% level and moving sideways. The MFI dropped below the 50% level but has managed to inch back up. The slow stochastic has fallen from the overbought zone. The MACD is positive but falling, and has slipped below the signal line.

Bottomline? The chart pattern of the Dow Jones (DJIA) index is beginning to form a bullish ascending triangle pattern that could propel it above the 11000 mark. Fasten your seat belts. But don't forget to book partial profits.


Jasi said...

Hey Subhankar!
A post from you after some gap. And a big gap it was. I will be honest with you, im a sucker for reading related to stocks and investment and your blog is the ONLY post online that I really look forward to :) To check your blog atleast once a day is not a ritual for me!
Please keep the good work up sir!

Subhankar said...

Thanks for the kind words, Jasi.

I was away to Dhaka (Bangladesh) representing my club in a golf tournament. Had no access to the Internet. Hope to be more regular in my postings.