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.

Market Breadth Data for Dow Jones

Let's also look at the market breadth (chart provided by https://www.advance-decline.net):

Advance Decline Line for Dow Jones: Nothing to say here, I can't detect huge or important divergences.

McClellan Oscillator for Dow Jones: Above the zero line for a while now with two small exceptions - still positive.

McClellan Summation Index for Dow Jones: Formed a bottom and has been rising for several days - positive.

Nothing more to add - positive signals coming from market breadth as you can see.

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: 50%, was 43,44% last week
  
• SMA 100: 53,55%, was 50% last week
  
• SMA 200: 66,67%, was 63,33% last week

All of those indicators improved and are at or above the 50% mark - this means we have an uptrend on all three time windows (short-, middle-, long-term).

Bullish signals from those indicators.

Summary

The outlook for the Dow Jones is at least neutral, or even slightly bullish. It wouldn't be a surprise if we saw a small pull-back, though.