State of Dow Jones - Calendar Week 40

I publish the "State of DAX" report every weekend, and after I've added some tooling to calculate the same market breadth data for the Dow Jones as well, I've decided that I can also publish a report on the state of the Dow Jones index.

Those "reports" are just simple blog posts which try to interpret the current technical and market breadth situation, from my personal perspective and with my limited knowledge.

"State of Dow Jones" might be a name that is too big for this blog post series, but I can't think of any other (good) name at the moment.

So here we are, starting a new blog post series. Welcome and let's start!

 

Technical Chart for Dow Jones

Total gains/losses for the Dow Jones in October so far: ~ 1,22%

Here is the current technical chart for the Dow Jones index, created on tradingview.com:

The Dow Jones has seen some interesting trading days! The range between 33 227 and 33 810 is a very important area. The level at 33810 has become a support, also the trendline happened to cross this area last week. The SMA 200 band is about to climb into this area, thus making it the third supporting element to keep the price stable.

Maybe it was a combination of those elements that attracted enough buyers to push the price back up again, now residing above the SMA 20. The lower Envelope band is now far away and the price actually almost touched the upper Envelope band which is usually seen as an overbought area (in the short-term).

The RSI managed to rise above 50 again and broke through two RSI trendlines.

The technical chart actually has changed from bearish to neutral with some very little bullish elements in it. For the Dow Jones it is now very important to overcome the resistance around ~ 35 000 to mark the end of this little correction.

 

Market Breadth Data for Dow Jones

After having looked at the technical chart, we should also consider the market breadth data for Dow Jones (chart provided by https://www.advance-decline.net):

The Advance Decline Line for Dow Jones shows no big divergences.

The data for advances vs. declines is in an uptrend.

The McClellan Oscillator has been rising and is still above the zero line. Bullish signal for the short-term outlook.

The McClellan Summation Index for Dow Jones has been advancing for four days in a row, which is usually seen as an entry signal for anti-cyclical traders.

Market breadth sends its first slightly-bullish signals.

 

Market breadth for Dow Jones: % of members above their SMAs

The market breadth data would not be complete without looking at how many percent of Dow Jones members trade above their important SMAs (chart provided by https://www.advance-decline.net):

Here are the numbers for the percentage of Dow Jones components that trade above their important SMAs:

• SMA 50: 43,44% (was 33,33% last week)
  
• SMA 100: 50% (was 40% last week)
  
• SMA 200: 63,33% (was 60% last week)

All of those indicators improved.

The percentage of Dow Jones members trading above their SMA 50 is usually a nice indicator for the momentum. Just to set things into relation: At Sep 21, the value for this indicator was at 16,67%, and now it is 43,44%. 

As you can see in the long-term chart, the current values are still low for the three indicators mentioned above. Maybe it is safe to say that a bottom has been formed, but it's a fragile one. Look out for the %-SMA-100-indicator to catch up with its SMA200 version.

Still, those indicators send slightly bullish signals as well.

Summary

The situation has improved for the Dow Jones. Neutral (and slightly bullish) signals from the data.