Stock Investment » $DJI

Stock Market Investment :DJIA Chart – November 25, 2011

admin — Tue, 29 Nov 2011 01:42:43 +0000

I charted the Dow Jones Industrial Average ($INDU, $DJI, DJIA), after the markets closed on Friday, November 25, 2011, after the Dow closed for the week at 11,231.78. The Dow is almost in no man’s land on its chart. It’s below its 10, 20, 50, 100 and 200 day moving

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I charted the Dow Jones Industrial Average ($INDU, $DJI, DJIA), after the markets closed on Friday, November 25, 2011, after the Dow closed for the week at 11,231.78.

The Dow is almost in no man’s land on its chart. It’s below its 10, 20, 50, 100 and 200 day moving averages and has decent space before it hits the next support or resistance level. The one trading channel that could continue to work is the trend line of lower lows and lower highs that started just a couple of weeks ago. This is a very steep descending channel and won’t last too much longer in its current narrow path. Its first true test to the downside will be at the 11,000 area. This area has played speed bump a few times recently and could be ready for another similar move. Below that, DJIA could make it all of the way down to its multi-month closing low at 10,655.30.

That looks like the direction the index is headed for, but Williams %R shows that it is at absolute oversold levels. In an extremely rare occurrence, it looks like the line for the 14 and 28 day periods has actually run off the page. However, the 56 day period hasn’t even made it down to the oversold level yet. A true wash out should move all three periods to oversold and the buy signal won’t be until they all move out of the oversold area. This looks like it’s shaping up to be a leveling point that could melt lower a little more while the 56 day period catches up.

It’s hard to want to catch a falling knife right here and start buying, but it might not be a bad place to cover any short positions. Such extreme oversold conditions are often followed by a quick short squeeze. Getting neutral before that can be a good way to preserve capital.

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Stocks Investments :DJIA Chart – Down Again

admin — Thu, 13 Oct 2011 11:56:55 +0000

I charted daily prices for the past three months (Q3) on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, September 30, 2011 at 10,913.38. The surprise of this past week is that it ended higher than the previous Friday’s close. The final three

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I charted daily prices for the past three months (Q3) on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, September 30, 2011 at 10,913.38. The surprise of this past week is that it ended higher than the previous Friday’s close. The final three days of the week made it feel like the week had to be a wash, but Monday and Tuesday’s gains saved the week.

The market has been in such a sideways pattern for so long now that some of my favorite technical indicators are not helping much. If they worked every single time then everyone would use them. I believe that we’re in a patch that is based almost solely on a sideways trading pattern and most other technical indicators will be moot until we see a break to the upside out of this trench. I filled the chart below with horizontal lines for the most part. These lines show the main borders of the trading channels and areas to the top side that have been good selling opportunities and areas on the low side that have offered good buying opportunities. The downside support levels are now closer than the upside resistance levels which opens the door to investors and traders who can stomach the risk of a potential break in support.

To the upside I included a thin black line that will be a potential key descending trend line to watch. It marks the intraday highs from four days in this past week and started with the intraday high in late July. That will be the first test to the upside on the way back to the 11,500 area that has proved tough to vault recently. To the downside the DJIA is very close to its first area of support. This is a good test, but not the only one that matters. The lower line has been tested once so far after the initial August low. A second test (third time down) could be all the markets need to launch another rally. More conservative investors would likely want to wait to see if this line in the sand holds again before taking any long positions. All of us should be ready to sell if that line breaks.

Although the moving averages haven’t been as helpful recently as they usually are, pay attention to the 10 day moving average (dma) and the 20 dma. Watch for another 10/20 crossover for a bullish signal. I got caught out by the “head fake” on Tuesday when the Dow peaked its head above both of these moving averages only to retreat soon after in the same day. The safer trade is to wait for the crossover to happen, not just look like it’s close to happening (like I did). Ideally this crossover will coincide with the Williams %R indicator breaking above oversold for at least three days. I preach this all of the time and yet I went bullish during the second day higher. Had I waited like a smart trader I’d have save some money. There’s nothing like another few thousand dollar lesson to help you remember the next time around. For now, the Williams %R indicator isn’t telling us anything as it treads through no-man’s land.

Stay nimble. The market is likely to break out to either side during Q4. The chances of staying within this trading channel are very slim for another three months.

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Stocks Investment :Dow Jones Chart – August 26, 2011

admin — Sat, 03 Sep 2011 12:59:52 +0000

I charted daily prices for the past three months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, August 26, 2011 at 11,284.54. I kept the chart’s range a little tighter than usual this weekend to emphasize the past few weeks’ daily

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I charted daily prices for the past three months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, August 26, 2011 at 11,284.54. I kept the chart’s range a little tighter than usual this weekend to emphasize the past few weeks’ daily movement more than anything else. Over the past 16 trading days a base started to form. The battle between the bulls and bears has raged in a 500 point range mostly with only a few outlying pieces. The intraday low from August 9th of 10,604.07 is starting to look like it could be this correction’s low. We saw the Dow try to retest it on the 19th, 22nd and 23rd, but it fell short (or rather didn’t go low enough) on either of these days. Instead those three days all ended with intraday lows close to each other, but slightly improving each day. This showed a reluctance of the bears to push any harder to the downside in fear of a major short covering rally that might catch them off guard. Instead each push lower ended shy of the previous day’s low. After three days of trying the bulls took the reigns and had they chance in the sun and finally pushed north of the 20 day moving average (dma) for the first time in weeks. They couldn’t keep the index above the 20 dma until close and that helped influence the next day’s start lower. Hope for the bulls returned on Friday. The DJIA closed almost directly on its 20 dma and once again above its 10 dma.

The short term trend lines of higher lows and lower highs are on a slow path to converge. This shows volatility decreasing and supports the based building theory. The longer descending trend line of lower highs that started in late July finally broke last week. This illustrates the worst of the steep decline could be over, although the DJIA could follow this line lower as a trend line of lower lows. That doesn’t seem as likely based on the Williams %R indicator. The second week of August showed a “head fake” in Williams %R as it cleared the oversold area and had multiple confirmation days which I always like, but the ascent wasn’t steep enough to get us to fall for it. This past week looks different though. %R on the 14 day indicator has moved higher sharply and had three confirmation days to follow. The 28 day indicator can’t seem to agree with it though. It’s higher, but not with such vigor yet. It might need the 10/20 dma bullish crossover to make it shoot higher.

The chart shows a clear attempt by the Dow to push higher, but its legs are still wobbly. It might be a time to test the waters with some smaller positions and be ready to jump in deeper when the shorter trend line of lower highs breaks (around 11,400) or dump what you have left in a mad dash for the exits if the August 9th low breaks. For the lower end, we’ll have a good warning signal if the lower trend line of higher lows breaks (around 10,930). Stay nimble and ready to react. The fun isn’t over yet.

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Stock Investment :Dow Jones Chart – Technical Analysis

admin — Sat, 03 Sep 2011 12:59:52 +0000

I charted daily prices for the past six months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, August 12, 2011 at 11,269.02. Two weeks ago when I last posted a DJIA chart I questioned if we were at support. I did this in the face of the majority of [...]

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I charted daily prices for the past six months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, August 12, 2011 at 11,269.02. Two weeks ago when I last posted a DJIA chart I questioned if we were at support. I did this in the face of the majority of the technical indicators I listed saying more declines were still in store for the index. The mistake was trying to rationalize what I didn’t think was right due to the timing with the debt ceiling talks. The point of charting is to avoid any rationalization and just listen to what the charts say in a vacuum. Although I listed the bearish indicators I gave more hope than I should’ve to the bulls. Lesson learned (again), moving on.

By Friday at least one indicator was turning. Williams %R has made the first move higher in what could be the beginning signs of a bottoming and a fantastic buying opportunity. The signal isn’t green yet, but could be by Tuesday. Williams %R has moved above the -80 oversold area that indicates a positive momentum shift, but has only done if for two days in the 14, 28 and 56 day periods I watch. The first day (Thursday) was almost right on the -80 line, but I’m giving it to the bulls by a very slight margin. Friday was solidly higher. I prefer to see two confirmation days after the initial break above oversold before I turn bullish and that should be on Monday or Tuesday at the latest. Because of the borderline first day move I’ll probably wait until Tuesday morning to get truly bullish again.

I might be more anxious to turn bullish if the 10 and 20 day moving averages (dma) were any closer to having a bullish crossover. For now they are stretched to their maximum distance we’ve seen in many months. The all clear signal won’t be given (as if it ever really is) until the 10 dma moves above the 20 dma. This week is the first time I’ve included the Parabolic SAR (PSAR) indicator. I’m going to give it a try to see how it works for me, but in back testing it appears to be a fantastic indicator, much like Williams %R. A bullish stop and reverse signal looks to be imminent from it at the start of the week, but I want to see it first and might want to see a second day of action before I give it more than a benefit of doubt. (Feel free to educate me on the use of PSAR since I’m new to it.)

I left some trend lines in the chart below to show potential resistance to any rally. The two lower lines were previous support. Support often becomes resistance after these lines break, so they are worth watching. The top line is this year’s trend line of lower highs. It has a high probability of acting as resistance again, so definitely watch this one. The lowest trend line that could act as resistance is very close to being in line with the 200 dma. Just as the 200 dma has been support so often, it can just as easily be resistance. A move back up to this line would be close to a 6% gain from Friday’s levels. That’s not a shabby gain and probably a good place to see the DJIA take an opportunity to regroup.

The downside might be limited to another test of the 10,604 area that marked the intraday low on Tuesday, August 9th. Again, there is no reason to rush in quite yet if we dip down there. A show of positive support there should bring out the bulls though, so be ready to jump on some bullish trades.

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Stock Investments :Dow Jones Chart – July 1, 2011

admin — Mon, 04 Jul 2011 13:01:12 +0000

I charted daily prices for the past three months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, July 1, 2011 at 12,582.77. This past week was huge for the Dow. Not only did it pull out a weekly return of more than 5%, it brought out a handful green [...]

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I charted daily prices for the past three months on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, July 1, 2011 at 12,582.77. This past week was huge for the Dow. Not only did it pull out a weekly return of more than 5%, it brought out a handful green lights from various technical indicators. The first came from Williams %R. Actually you can see the thin green line that shows the initial heads up that better days were ahead. I always suggest waiting for a couple of confirmation days after the break above the oversold area. If you waited you would’ve had an opportunity to buy back in closer to the lows again. (Just lucky this time.) The final (thicker green line) came this week and that’s when the non-stop rally started. Soon after that we saw the 10 day moving average (dma) cross over the 20 dma for one of my favorite bullish indicators. You could see this crossover coming days in advance, but when it hit is when it looked like someone poured gas on the bull’s fire.

The bounce from the 10/20 crossover gave the rally enough momentum to break above the trend line of lower highs that has been acting as resistance since it started at the beginning of May. Just a couple of days later the 50 dma broke intraday and the following day we saw a confirmation day of this break to let us know it wasn’t a fluke. I threw in one final horizontal line that was previous resistance and support to show another mild bullish signal.

Volume was below average most of the week which made the run higher easier, but with this much of a rally in this few number of days it’s not something you want to miss out on. This coming week should be a light volume week again due to the holiday on Monday. Then earnings start and volume and a more trustworthy direction should be established soon.

Have a safe and happy Fourth of July to all of my readers in the USA!

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Stock Investment :DJIA Chart – February 18, 2011

admin — Wed, 23 Feb 2011 13:36:38 +0000

I charted daily prices for the past year on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, February 18, 2011 at 12,391.25.
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Last week I pointed out that it didn’t look like this rally was ready to give up, but faced potential resistance at

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I charted daily prices for the past year on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, February 18, 2011 at 12,391.25.

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Last week I pointed out that it didn’t look like this rally was ready to give up, but faced potential resistance at the SPX’s trend line of higher highs. The DJIA’s chart had just the same line looming for it, but it crept up along that line through the week and finally on Friday it broke out above it. When the Dow last bumped itself above a trend line of higher highs (in January) it paused, took a short dip to the previous trend line of higher lows and then shot back up and used the higher trend line as a new trend line of higher lows. A few weeks ago I pointed out the some of the trend lines were converging and the likely direction was lower, but it appears the bulls have a little more gas in their tanks still and don’t want to roll over quite yet.

Sticking with the theme of “what I said previously”, I pointed out that the 10 and 20 day moving averages (dma) weren’t giving the sell signal yet. That’s still true as long as the 10 dma stays above the 20 dma. The 10 dma has even moved back to offering support during the past couple of weeks of melting higher. The 20 and 50 dma lines are getting steeper in their chase higher which will make the areas of support even closer to the current levels and keep any mini-corrections in check. It also sets up a bigger correction (still don’t think more than 10%) once these first three lines break. Here are the levels for the moving averages as of Friday:

I’ve also pointed out numerous times that the Williams %R indicator is still in the overbought range which continues to signal there’s still life in the bulls’ rally. The one difference this week came from volume. The daily volume levels have been below average still which could mean there’s still healthy skepticism out there, but on Friday volume jumped. One has to wonder if this could be a bit of a capitulation for some of the investors who have been sitting on the sidelines as the trend line of resistance broke. It’s also more than likely possible that since Friday was options expiration that the increase in volume came from that. Watch it on Monday and Tuesday to see if we get some better hints.

As I keep reiterating, this rally will end some time and we’ll get a nice correction for some better buying opportunities, but it’s hard to want to get off the ride when it’s still so much fun.

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Stock Investments :Dow Jones Chart – Converging Trend Lines

admin — Wed, 23 Feb 2011 13:36:38 +0000

I charted daily prices for the past year on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, February 4, 2011 at 12,092.15.
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The one day dip we saw two Fridays ago looked like it might be the start of something bigger, but like I always insist upon

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I charted daily prices for the past year on the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after it closed on Friday, February 4, 2011 at 12,092.15.

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The one day dip we saw two Fridays ago looked like it might be the start of something bigger, but like I always insist upon – it’s extremely important to wait for a confirmation day before jumping ship. The DJIA never crossed beneath its 20 day moving average (dma) and didn’t break its trend line of higher lows either. It only took two days for the index to make it back to the top end of its trading range where it met resistance again at its trend line of higher highs. This journey between the two lines is getting shorter and shorter. To state the obvious, when two trend lines are converging one side has to give in and stop working because eventually the lines will cross over. Which side breaks first is anyone’s guess, but after running higher for more than five months one might have to give the bears a little higher probability of winning something finally.

I drew two trend lines of higher lows with the shorter one coming into play more often and with one break a couple of months ago for a few days. This trend line is also close to the 20 dma which I mentioned above has really been the moving average to watch. A break below this dma might be enough to end the rally. The other, longer, trend line hasn’t broken yet and has a slightly steeper tilt to its ascent. It’s going to converge soon with the other trend line of higher lows which could give it more support, but also doesn’t give much of a second wave of support if the first breaks.

Below this ascending area is the 50 dma which is always a keep moving average to watch in my opinion. It’s not far above the ever so slightly ascending line I drew that’s close to 11,500 now. A drop down here would be close to 5% below Friday’s close and could be a good speed bump on a decent. If the DJIA gets below that it might be a quick trip back towards the 200 dma and the 11,000 line. We’d witness about 9-10% of a drop for the index and I can’t imagine buyers not leaping from the sidelines at the opportunity to get in at a point they wished they had last fall.

I didn’t show the 10 dma, but keep an eye on it in the case of a move lower to see when it has a bearish crossover with the 20 dma. Historically this crossover has been a fairly reliable indicator to take some profits. It’s not quite in play yet, but could be later this month. The Williams %R indicator isn’t calling for a correction quite yet either, but keep an eye on it. It might give a hint before the 10/20 crossover occurs. From Friday’s close the room to move higher seems limited by the trend line of higher highs and the trend line of higher lows is starting to breathe down its neck looking for the convergence and the end of this aging rally. Stay nimble, but don’t give up potential profits too soon if you are daring enough to hang tight.

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Stocks Investment :Dow Jones Chart – Still Running

admin — Sat, 25 Dec 2010 11:59:16 +0000

I charted the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the markets closed on Friday, December 10, 2010 when it finished for the week at 11,410.32.
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Although the DJIA hit resistance this week at its previous intraday high it didn’t fall much and managed to

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I charted the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the markets closed on Friday, December 10, 2010 when it finished for the week at 11,410.32.

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Although the DJIA hit resistance this week at its previous intraday high it didn’t fall much and managed to climb back up slightly from those lows. One of the first things that jumped out to me in this chart is the bullish crossover of the 10 day moving average (dma) above the 20 dma. When this has happened in the past we’ve seen some strong periods follow. There’s room in the trading channel up to the trend line of higher lows for this to work again. Before that can happen, the Dow will have to muster the strength to get over this year’s high that could be worthwhile resistance for a while. Based on how the S&P 500 moved this week it seems the Dow should come along for the ride before long.

To the downside, if the 10 and 20 dma don’t hold support, are a couple of trend lines of higher lows. The first is only about 3.6% lower from Friday’s close and the second is almost 8% lower. Until the end of the year I see it hard for the Dow to loose much steam and expect any dip to be shallow. In to next year we might be able to visit the lower trend line in January or early February which could be a full 10% correction by then. With the 200 day moving average at 10,670 as of Friday it might be about in line with where this lower trend line will be by then. Any correction that makes it close to the 200 dma, the trend line of higher lows that started in the middle of 2010 and is around 10% lower will most likely be met with heavy buying, especially if bond prices continue to fall and investors need somewhere to place their new bets.

Volume didn’t offer much insight this past week as it was fairly average on both positive and negative days although the negative days were a little heavier. Williams %R is back in the bulls camp though and even finished on an up swing at the end of the week as momentum continued to favor buyers.

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Stock Investments :Dow Jones Chart – November 19, 2010

admin — Fri, 26 Nov 2010 02:58:03 +0000

I charted the Dow Jones ($DJIA, $INDU, $DJI) after the markets closed on Friday, November 19, 2010 when it finished for the day at 11,203.55.
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I noticed the 10 day moving average (dma) looks like it is about to have a bear crossover with the 20 dma. It’s not quite there

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I charted the Dow Jones ($DJIA, $INDU, $DJI) after the markets closed on Friday, November 19, 2010 when it finished for the day at 11,203.55.

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I noticed the 10 day moving average (dma) looks like it is about to have a bear crossover with the 20 dma. It’s not quite there yet, but appears like it’s going to be hard to avoid within the next day or two. As of Friday both of these moving averages were acting like resistance for the index. That’s key, especially after the 20 dma held support starting with the beginning of the rally at the beginning of September and throughout October. An extra push by the 10/20 bear crossover could be further foreshadowing of lower lows to come. The kink in that plan might come from the 50 dma which held support this past week for three days before the Dow bounced higher. Those three lines are creating a mini trading channel that should supply an advanced warning of a move in either direction.

The trend lines of higher lows and higher highs that marked the trading channel for the past two plus months seems to be dead, but I left the lines on the chart for now to see if they come back into play as resistance on the way back up. Even the previous trend line of higher lows gives room for a decent gain from Friday’s closing levels. To the downside I see another, longer trend lines that was resistance and then became support. It happens to line up fairly closely with the 50 dma and is also worth watching.

After such a big run higher through the fall, I expect more than the small dip we saw last week. This past week’s intraday low marked a 4.1% correction from the recent highs. 10,878.95 would be a 5% correction. It might be close enough to the 5% mark to appease the bulls to come back to the herd and carry us through the Santa Clause rally. If that happens January could be another tricky month again. A 10% correction from the recent intraday highs would put the DJIA at 10,306 which is below the lowest trend line of higher lows that I drew. I’d expect the trend line to hold before we hit a 10% correction right in the near term. I don’t expect more than a 10% fall (an not really even that much) in the near term, but everything is possible.

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Stocks Investments :Dow Jones Chart – Over the Hurdle with Room to Spare

admin — Fri, 26 Nov 2010 02:58:03 +0000

I charted the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the markets closed on Friday, November 5, 2010 when it finished for the week at 11,444.08.
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A couple of weeks ago when I last charted the DJIA I noted that a stall at the levels around then wouldn’t be

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I charted the Dow Jones Industrial Average ($DJIA, $INDU, $DJI) after the markets closed on Friday, November 5, 2010 when it finished for the week at 11,444.08.

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A couple of weeks ago when I last charted the DJIA I noted that a stall at the levels around then wouldn’t be a bearish signal until the trend line of higher lows broke. What followed was nearly two weeks of a pause which included a few touches to the trend line of higher lows and then a break out all of the way back up to the trend line of higher highs. The DJIA was coming close the point of convergence between the horizontal line that marked the year to date intraday high and the trend line of higher lows. The bulls won the battle and danced a couple of hundred points higher with the victory though. This same horizontal line could come back into play again, but this time it might be as support.

After such a strong finish to the week it’s hard to come up with much meat for the bears. I don’t think this one holds too much weight, but is still worth pointing out. This current rally started close to the same time the 100 day moving average (dma) crossed under the 200 dma. Now we can see the 100 dma has made it back up and is crossing over the 200 dma to the upside. It could be this is something to note and see if the reverse plays a roll in tripping up the bulls, but the rest of the technical indicators aren’t helping that case much. While the DJIA is in contact with its trend line of higher highs as each day passes it gets more room to move higher along with it. More than likely we’ll get a pause again as everyone catches their breath, but that pause should be shallow and most likely won’t dip lower than the horizontal line I mentioned above and the same trend line of higher lows.

That trend line I keep mentioning is also in line with the 20 dma which has been very supportive for the past month of this rally. Williams %R showed us that momentum for the bulls isn’t gone yet as it shot back to the top of its overbought range for both the 14 and 28 day indicators. Even volume picked up above the average daily volume this week on positive days. As bullish as I sound, I know this rally will end at some point, but with the end of the year almost here, a lot of money managers are going to have to jump in to chase stocks’ returns and this will continue to push prices higher. There’s no reason to get in front of a stampede, but don’t loose yourself in the excitement too easily since we all know what happens when the easy money is gone.

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