State of Dow Jones - Calendar Week 42 2021

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Hi folks! Welcome to another part of the blog post series State of Dow Jones for Calendar Week 42 2021 Part three already. This week has been incredible for those that invested into the Dow Jones. But how healthy is the current price development and what's the outlook?   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 managed to trade above its SMA 20 and also overcame the turquoise trendline / flag which happened to be at the 35 000 resistance level, which became a support shortly afterwards. The index only knew one direction during this week - upwards. The current price movement stopped a few points above the old all-time high and within the upper Envelope band. On the daily time frame, the index now looks slightly overheated. For now, the old all-time high around 35 631 holds, but it wouldn't be a big surprise if there was a small pull-back before t

Dow Jones somewhat in the middle of nowhere

Dow Jones somewhat in the middle of nowhere


 
Technical chart (1h) of the Dow Jones index
Source: tradingview.com 

The Dow Jones remains on a high level in a sideways phase for roughly 10 consecutive days. The SMA 20 (orange line) works as a stabilizer for now, although we've seen a dip beneath this line during the day.

The Dow Jones also moves within a trend channel  (see image above). Right in the middle of this channel another trendline emerged, at apparently the SMA20 and this "middle trendline" come close today. So for now, this area seems to be a strong support. 
 
You know that I am a big fan of the Envelopes indicator, since it is a very simple way to find out if an index is overheated or not. I've added a very simple version of the Envelopes to the chart above. As you can see, it confirms that the Dow Jones seems to be in the middle of nowhere because the price dances around the middle of the Envelopes as well (and the middle is the SMA 20 line).

The red lines at ~ 35 100 and 35 500 mark old highs. You can see that they define the current trading range. It is very likely that the lower red line is an area of good support, so if the Dow Jones falls beneath the SMA 20, there is a good chance that the area around 35 100 would bring enough stability.

Market Breadth Data for Dow Jones


 
 

The Advance Decline Lines follows the index and shows no big divergences.

The Advanced vs. Declineddata is below the zero line again.

The McClellan Oscillator is negative again, after being above the zero line for one day.

The McClellan Summation Index declined again, being below the zero line for seven days in a row.

Summary 

On a very high level, the Dow Jones floats within a limited trading range. While being in an upward trend on the long-term, the short-term perspective is neutral with a little touch of "bullish stability". 
Honestly, it might already be a bullish thing that the Dow Jones had no real sell off during the last weeks, despite the weak seasonality and the geo political troubles.
 

 




 

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