The DOW This Week...03/12....07/12

[ChartMan]

Not a good start to the week for the bulls. Down 88 or so.. A rapid drop of 150 odd points to bounce straight off support at 9700. Even before this, TA was showing good positive divergence from around 3pm and the low at 9735, to 3:30 and the LOD at 9704. Then a weak rally to test 9775 a few times before dropping back to 36,and closing at 9763.
How does that leave things then?
Fib. retracements from the high are showing the dow playing between 50% and 62% which is unusual.We finished below the 100 MA and the "rolling top", which is squeezing us down.There is less and less room for manoeuvre here and something has to give, one way or the other. EOD close is now below the 7MA and has to point to a short from here on.
Resistances: 9775- Fib 62%, 9800 horizontal.
Supports:9700- Fib. 50% and horizontal.
Then 9640 (38%) and 9600.
Final thought...If we have a Head and Shoulders developing...confirmed by a nice drop tomorrow, the target ( from H&S theory) is....9640
A break above 9800 breaks the down thrust, a drop below 9740 or so ( on a closing basis) will confirm it. Common sense has to be in favour of the downside.

 

[ChartMan]

Well, that was a short short... We had a good strong rally today, closing up 130 pts to finish at HOD. RSI and CCI both finishing very strong on the 10 min chart. We've closed well above 9800. killing the prospect of the possible Head & Shoulders in the process.We also put paid to the "rounded top", and are now firmly in consolidation mode.Trouble is, doom and gloom, the rise today was "too much too quick" without good reason ( as far as I know).OK so we finished strong at HOD, but the last rally was overdone in my opinion.We've ended up at strong resistance of 9900, and It'll take continued strength to continue. I'v e seen, typically, 3 rate changes of the price slope, and we've had two now, so maybe we will get one more push tomorrow.If we do, that could well push us up close to the 10K again, but there are resistance stops at 9960/70/80 and 90.The last steep rally went 300 points or so , and this can do the same, from the base at 9700. Is this supported by the "W" formation target...??
Resistance as above, support at 9700.
100MA at 9798,Regression Line at 9820
TA indicators are making ( just) higher highs, relative to the last high at 9886, and very close to the 9900 highs.
Looking good.

 

[ChartMan]

And good it was too.Straight up to 10,060, much to my surprise, without so much as a sniff at the hinted resistance levels at 9960/70/80/90, although it did pause for a minute at 9960.Then followed a period of consolidation, slowly rising to 10,095 then drifting back to test 10,050 before a final push to 10,140, and a slow fall to close at 10,114. Not the strongest of recent finishes, but a distinc lack of a sell off into the close. More a sort of " I can't be bothered"....
The day's action has again been excessive, and as such, I would expect a drop at the open. How far? Well, there is a new Uptrend line established, where resistance at 10,050 turns into a tested support, so that would be my target drop.
It's now difficult to get any sense of a target rise value, as we have to go back and rely on EOD data to find resistance values.This data is too far away and too vague to be accurate. My guess at resistance is 10,160 and 10,240. A month or so ago I suggested 10,240 as a target, and now it's not just a pipe dream.
All in all a good day,with more to come. TA is strong on all timescales except 1 min chart, but even there, there is no sign of any neg. divergence.
Finally , remember the tripple slope change to the up side....we got that , and more than our fair share, and a flattening out at the end.This can't be sustained so as I said earlier, expect the drop, and some consolidation before we move on.
Resistance at 10,160 and 10,240
Support at 10,090,050 and 10K
100MA at 9953, Regression at a lowly 9870

Post script. Regression line- If we take it back to the low on 24/09, then it's current value is 10,064- still more or less disecting the upper and lower trend lines...which is only what we would expect. Funny how it's close to the uptrend support line...

 

[ChartMan]

Bit of a mish mash today...Still, after the expected drop and double test of 10,080, we rallied to 10,167, just a tad over the resistance I suggested yesterday.That, coincidentally, was the regression value (EOD) at yesterday's close.Not a convincing test, more a "kiss and tell".That was followed by a steady decline for the rest of the day, with a usefull double bottom test at 10,090.I can't see this holding tomorrow, when we should go back and test support again at 10,060.The day ended weak with a bear wedge in evidence- that would give us a target drop to the 10K level. Seems that holding above 10k is going to be a real test of belief.Then there is the substantial negative divergence that has developed over the last two days. We saw the same thing during the last two "tripple tops", preceding a fall back to major support. If the market feels overbought as well, then we could lose all the recent gains and fall back to 9900. Having said that, there will be stiff resistance between 10K down to 9965.
All in all, there is little to see in the way of more upside yet.
Resistance 10,160, 10,240
Support 10,090,10,060,10K etc.
100 MA 10,047
Regression (EOD) 10,095

 

[neil]

Dow chart

Hi Chartman
Interesting divergence between price and indicators. Does this portend a possible fall?

neil

 

[ChartMan]

That's how I read it.

 

[RogerM]

Thanks for the continued comentary Martin. What settings do you use for RSI and CCI please?

 

[ChartMan]

RSI = 14 CCI = 90

 

[ChartMan]

Seems that I got yesterday's prediction just about spot on. All the way back down to 10K, with pauses at 10,100 and 10,060, finally testing the 10K twice at 10,002/3.The bear wedge performed spot on. nice rally at the close too, a sign of things to come next week, I feel. The RSI down channel that was the root cause of the fall, showing stong negative divergence, has now been broken to the upside. In the same way that we have had strong neg. divergence the last few days, we are now seeing the opposite in MACD Osc. ie it is showing a strong up trending channel.Other indicators are making higher lows, along with the price, so there is reasonable confirmation there of a bottom.
What of next week? Could be that we have another test of 150 again. Just bear in mind resistance values at 060,090 and 125.
Support still at 10,028, 10K,9964 and 9900. I still think 10K is the blockbuster support and a breach is going to be bad news.
100MA at 10,045
Regression (EOD) 10094
No major TA formations to give any clues as to possible direction.
Have a good week.....