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Thursday, December 2nd, 2010

Dow Jones Daily Chart - 2nd December 2010

The Dow Jones index closed firmly higher once again today, closing with a relatively wide spread up candle on the daily chart and ending the trading session 107.31 higher, following yesterday’s strong performance for equities, which saw the Dow break above all four moving averages once again to recover much of the lost ground of the last few days. Much of the impetus for the recovery came from Europe, following ECB hints that they would step in to buy bonds in order prevent any defaults in the EU member states, helping to ease market concerns with a consequent return of risk appetite from investors and speculators as a result.

From a technical perspective, yesterday’s break and hold above the short term moving averages was significant, and gave a clear signal that bullish sentiment had returned to equities, duly confirmed in trading today as the index climbed higher and back to retest the 11,451 high of early November, which is now a key level. Indeed we were given a strong signal on Monday form our volume spread analysis, with volume at 239M and above average on the day, but coupled with the narrow spread down candle, giving us a clear indication that this was market buying ahead of a move higher, a move which duly arrived on Tuesday. This was an excellent signal and well worth waiting for, and gave a clear sign of market maker activity and in particular buying in preparation for taking the index higher once again. The volume both yesterday and today has been as expected, and with no signs of selling from the professional players, adds further weight to our analysis.

In summary, a break and hold above the 11,450 price region will provide a strong platform of support for a continuation of the longer term bullish trend, and should this occur later this week, then we can expect to see the index continue higher, and on towards our year end target of 11,850. The volumes of shares traded support this analysis.

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Dow Jones daily analysis – 15th November 2010

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Sunday, November 14th, 2010

Dow Jones Index - daily chart 15th November 2010

An interesting week for equity traders and investors last week on Wall Street, who saw the Dow Jones Index close lower for the first time in five weeks, as a combination of a recovery in the dollar and concerns in Europe over a potential Irish bail out package worried the markets, which stumbled lower as a result. The index closed lower on Friday at 11,192.58, with a relatively wide spread down candle, which broke and held below the 14 day moving average on the daily chart, adding a short term bearish tone to the chart following Thursday’s hint of possible support from this key moving average. However, the low of the day at 11,143, tested support in the 11,180 area, and just above the potential platform of support immediately below, which should hold firm in due course. Whilst the longer term outlook remains firmly bullish we need to see a break and hold above the high of last week at 11,451 for confirmation, and once this has been achieved then expect to see the trend higher established once again as we move towards the end of the year, where my forecast remains 11,875 for the Dow Jones index.

Of particular interest last week was the volume, which was well above average on both Thursday and Friday, and coupled with the relatively narrow spread candles, suggests that this is professional buying, with the market makers absorbing the selling pressure in preparation for a move higher. As such this has given us a clear signal that the Dow Jones index is likely to recover most of last week’s loss in due course, and move back above both the 9 and 14 day moving averages as a result. The longer term moving averages continues to remain firmly positive with the 40 day pointing sharply higher and the 200 day also sloping upwards.

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Dow Jones daily analysis – 11th November 2010

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Thursday, November 11th, 2010

Dow Jones Index - daily candle chart 11th November 2010

An interesting day for the Dow Jones index yesterday, which ended the trading session marginally higher at 11,357.04, gaining 10.29 index points on the day having fallen earlier to test a low of 11,255.02, before recovering to end with a small hammer candle on the daily chart. The recovery yesterday was largely as a result of a fall in the dollar, which has seen a modicum of support over the last few days, reflected in US equities which moved lower as a result early in the week. The feature of yesterday’s price action was the low of the day, which found some strong support from the 14 day moving average, once again confirming the bullish sentiment for equities, and with the index recovering to close above both the 9 and 14 day moving averages, this is adding further weight to our analysis. As we continue to hold above all four moving averages, the longer term outlook remains firmly bullish, and given yesterday’s strong bull signal, we can expect to see the Dow Jones index recover much of the lost ground of the last few days, and continue the current trend with renewed momentum in due course.

A check on yesterday’s volume at 164.2M reveals that these were average, and in line with the price action on the day. Clearly the bulls remain in the ascendancy at present, and until we see any clear indications that the market makers are preparing for a move lower, then we can assume that they will continue to take the index higher helped by the continued long term decline in the US dollar. In yesterday’s currency trading, the dollar rallied in the morning, only to run in to resistance at the 40 day moving average, suggesting that the recent move higher for the dollar, may be running out of steam. If this is indeed the case, then the technical picture for the Dow will continue to remain positive, and a break and hold above last week’s high of 11,451, will then open the way for s sustained move higher, and on towards our year end target of 11,875 and beyond. You can catch up with the latest ftse 100 forecast by following the link here.

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Dow Jones daily analysis – 9th November 2010

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Tuesday, November 9th, 2010

Dow jones daily analysis for the dow jones index

Dow Jones daily chart - 9th November 2010

The Dow Jones index traded in a narrow range yesterday, ending the US trading session on Wall Street with a narrow spread down candle with a small shadow to the lower body, and closing at 11,406.84, 37.24 points down on the day or just 0.33%. Yesterday’s minor retracement was much as expected following Friday’s small doji candle which had been accompanies with above average volume, suggesting a possible short term reversal which duly arrived, but the question now of course is whether this will develop into a deeper pull back or is simply a short term correction to the longer term bull trend. Naturally an analysis of one day’s trading can be misleading, but the key point to note from yesterday’s price action is the volume, which was below average at 144.0m shares traded, which suggests a lack of selling pressure from the professional money, and indeed in the last few weeks we have seen little evidence to suggest that the market makers are preparing to take the index lower just yet. As such our analysis would suggest that whilst we may see some further price action to the downside or sideways consolidation at this level in due course, the fundamental picture remains firmly supportive of a move higher for equities, as the FED begins to implement round two of it’s quantitative easing programme.

From a technical perspective, yesterday’s price action remained well above all four moving averages once again, a key feature of the last few weeks, and with plenty of clear water below to the 9 and 14 day moving averages, these are likely to remain untroubled once again today. With all four moving averages continuing to point sharply higher, the longer term outlook for equities and the Dow Jones in particular remains strongly bullish, and having broken above the 11,258 high of mid April, this is now providing a strong platform of support for the next leg up in the bull trend as we move towards the 11,867 high of mid 2008.

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Dow Jones Daily Analysis 8 Nov 2010

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Monday, November 8th, 2010

Forecast Dow Jones Index - daily chart 8th November 2010

A quiet day for the Dow Jones Index on Friday which ended the week and the trading session marginally higher, up just 9.24 points on the day or 0.08% at 11,444.08 and closing as a small doji cross candle. Friday’s subdued price action came as no great surprise following Thursday’s surge higher as traders and investors closed positions and banked profits ahead of the weekend. The small doji candle thus created suggests a possible short term pullback and re-tracement lower in today’s trading session, an analysis which is further confirmed by the volume, which was higher than average at 211.7m on the day but with no consequent rise in price which is always a warning signal that the market is likely to run out of short term momentum. To put this into context Thursday’s volume was slightly higher at 234.7m with the index gaining 224 points on the day, so clearly there is some short term weakness. From a technical perspective the longer term outlook for the Dow Jones index still remains firmly bullish as it continues to trade above all four moving averages with the 9 and 14 day in particular a strong feature of the recent trend from early September with both having held firm throughout. The 40 day moving average continues to point sharply higher and with the 200 day also beginning to incline upwards this is adding further weight to our analysis.

The fundamental picture for equities continues to be dominated by US monetary policy from the FED who confirmed their QE2 programme last week which to date has received stinging criticisms from many quarters not least because it is considered to be a policy of self interest and an indirect mechanism to debauch the US dollar. Today’s likely pullback in the Dow will also be helped by a modest rise in the US dollar, particularly against the euro. However, this re-tracement for the Dow will be short lived given the strong technical picture coupled with the underlying fundamentals, we should see the Dow continue its upwards path in due course and my own forecast still remains above 12,000 and beyond.

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