$INDU Update for 02.02.2008

DOW JONES INDUSTRIAL AVERAGE - $INDU

Monthly chart shows January ended with strong buying off the key LIS and prior resistance at the 11,777 area. Index is currently right back at the up trendline in place. There is no buy signal/pattern off this timeframe as of yet. Will have to drill down to lower timeframes for shorter term direction.

Weekly chart shows buying strength all last week. Index currently right at key LIS with "old support becoming new resistance. Market will need to clear this LIS in order to see higher. Resistance is directly above: key LIS, neckline of h&s pattern and mid-point of large red candle. IF this resistance holds, THEN look for a retracement of the last leg up. IF this resistance is broken, THEN look for a re-test of the highs of 2007.

Daily chart better shows the resistance above. Index currently is trading above its 8ema, but remains below longer term moving averages. IF we get a retracement back down next week, THEN look for a test of the low. On an intraday basis, the last move up has been more corrective than impulsive. Something to keep in mind as next week's trading activity unfolds. It is still possible that the last leg up is a consolidation pattern, especially if the current resistance holds.