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 below the SMA20 again

Dow Jones below the SMA 20 again

While the NASDAQ 100 loves to create new all-time highs, the Dow Jones seems to be eager to test its current trend range.

Dow Jones: Technical situation

Technical chart for Dow Jones created at tradingview.com
 
The Dow Jones fell through the SMA 20 line (which supported the price for more than 10 trading days), ignored the support at 35150 (see pink line in the chart) and stopped at a previously tested trendline within the bigger trend channel. 
 
The next support is located at 34849. Since the price stopped several times at this level, it might be as well considered as a strong support area.
 
If the current phase of weakness should not grow into a phase of correction, it is crucial that this level will hold. After that, the limiting trendline (currently at 34540) and the lower border of the simple Envelopes (34256) could be the next targets. 

From a technical point of view, the Dow Jones has potential for  0,7% - 1,5% more decline.
 

Market Breadth Data for the Dow Jones

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

The Dow Jones is now moving towards the lower Envelope bands but is far away from being oversold.

The Advance Decline Line for Dow Jones follows the price movements, I can see no big divergences here.

The Advanced vs. Declined data for Dow Jones reached a negative extreme again, which means chances could be high that during the next trading day, there is a bounce into the opposite direction.

The McClellan Oscillator for Dow Jones reached the lowest value in our historical data, which doesn't have to mean much since we only have data for the last 30 trading days or so. Still, it mirrors the short-term weakness of this index and some might be tempted to buy the small dip ;)Maybe wait one more day or at least wait for the start of the next trading day to determine the next development.

The McClellan Summation Index for Dow Jones has been below the zero line for 8 days in a row and reached extreme values compared to our other historical data. This also reflects the current phase of the index, but also gives a small sign of hope for those who are bullish for the Dow Jones since it is unlikely for this indicator to take a deeper dive (at least not much deeper). The market in general is too strong and I guess there will be enough buyers to prevent a greater correction.




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