The Dow is still on track for confirming a double bottom reversal pattern. Note the nice W pattern being formed? We've got the 2 bottoms. And the right side of the W is being finalised.
Note that in some W pattern reversals there is a A pattern whereby there is a throwback before finally making a strong assault on the confirmation levels.
It is however too early to say how things will go. I will wait for confirmation signals. To be safe a chart confirmation (ie close above 12765) plus a 5 day time confirmation (ie after 5 days of first breakout of 12765 still closing above 12765)
Other bullish signals currently are the 3 days of closes above the downward trendline. The Dow yesterday managed to close above that trendline despite the very very bad news out on financials, durable goods order and housing starts. The Dow has also been trading above the 50 day moving average. Notice the 50 day MA? The first hit of the 50 day MA is usually followed by a strong bounce down. This is what is seen on the chart. The second assault on the 50day MA proved to be a breakthrough and the Dow has been trading above it ever since. Will it hold?
If the Dow does recover today it looks like 12300 would be a necktie crossover of the 25 and 50 day moving averages and would be a near term support to watch.
All eyes on the US GDP results and Jobless claims tonight at 830pm (local time).
It will also be interesting to see how the Dow closes if the news is bad.
I am generally bullish looking at the chart. Of course for charts they don't tell you why but more when.
A close above 12600 would be bullish for me because that's a close above the trendline joining the peaks of Dec 2007 and the one on Monday. Certainly not impossible if you consider that is +178 points away from yesterday's closing and right now it seems the market reacts more strongly on the upside to ANY good news compared to yesterday's -100 to extremely horrible news.
A close below 12300 would be a bearish signal to me and I'd probably consider taking whatever profits I have right away.
But somehow I think we might be surprised on the upside tonight.
Good luck to everyone! :)
3 comments:
agree that currently 12750 is the resistance to watch, a surge above it with good volume will confirm a double bottom.. yesterday's drop can be considered as a "return move" in TA.. a drop below the downtrend line (Line A as shown in my blog) may continue to resume the downtrend.
btw.. the 2 links in "Other market related blogs" is broken.. and do you want to exchange link with me?
oops. Ok fixed it. Have added your blog to the list too.
thanks.. have added your blog too.
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