State of Dow Jones - Calendar Week 41 2021

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State of Dow Jones - Calendar Week 41 2021 Welcome to the second episode of the blog post series "State of Dow Jones", where we look at the leading US stock index from different perspectives and try to determine how solid the current development is. Technical Chart for Dow Jones Every "State of Dow Jones" blog post should start with the technical chart, so here we go (created on tradingview.com): The Dow Jones overcame the old falling highs and the important resistance at 25 000, now trading at 35 294 points. The index is trading above its SMA 20 again and even went into the upper Envelope band. This means the Dow is slightly overheated and it is likely that the index will show a small pull-back before rising again. The RSI is at 60, three trendlines were identified and crossed during the last trading days. The technical chart provides us with enough confidence to say that the correction might be over and the outlook is neutral, or maybe even slightly bullish. Marke

Dow Jones and DAX quick analysis

Dow Jones and DAX quick analysis

The first trading day after the elections in Germany is over. Reason enough to take a quick look at the DAX.

Its bigger brother, the Dow Jones, is always an interesting index so I don't need a particular reason for a quick analysis.


DAX situation

Technical chart for DAX created at tradingview.com

The DAX started very good into this trading day with gains around ~ +1,21%. Experts say that many investors liked that the outcome of the elections in Germany make an unwanted constellation for a government coalition impossible. Instead, stability can be expected from the next German government. Other investors seemed to be scared of long negotiations between the parties that could form the next coalition. During the day, those gains shrunk to ~ +0,27%, but a gain is a gain.

On the chart it means that the DAX continues to trade below the SMA 20, but at least it trades above the important support line at 15 500. The RSI is still below 50.

Technically, the situation brightened up a little bit, but the consolidation is still ongoing.


Market breadth data for DAX provided by https://www.advance-decline.net

Market breadth looks better than the technical chart.

The McClellan Oscillator again is above the zero line, although declining.

The McClellan Summation index had a bottom around -20 and advanced a couple of days in a row. This could mean that we've seen the bottom of the consolidation and now would be a good time to time long-term investments.

When looking for a short-term scoped trade, I would wait until technical indicators (SMA 20, RSI) confirm the "not-so-bad" outlook.


Dow Jones situation

Technical chart for Dow Jones created at tradingview.com

The technical chart of the Dow Jones brightened up a bit. The index trades above its SMA 20 again and even climbed back above the RSI level 50. In addition, the support at 34 850 was reconquered. 

For bulls, it will be important to overcome the level at ~ 35 150 and the small downtrend channel (purple trendlines). It will be also important for the next trading day to confirm that the Dow Jones remains above the SMA 20 and the RSI 50.

Market breadth data for Dow Jones provided by https://www.advance-decline.net

The McClellan Oscillator has been above the zero line for three consequent days - good. The McClellan Summation Index has been advancing for several days as well. When looking at market breadth, the picture brightened up and one could speculate that we've seen the worst when looking at the last 10-15 trading days.


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