Sunday, August 03, 2008

$INDU Update for 08.02.2008

Monthly chart shows July 2008 ended with a doji/spinning top candlestick pattern, indicating indecision between the bulls and the bears. The index remains below the the key LIS and important high of January 2000 of 11,750.28. It is also below the 8ema and the 34ema. There is currently no buy signal/pattern evident on this timeframe. Eventual downside target (first target) remains at the .618 fib level.

Weekly chart shows index to be below its 8ema, and also below the January 2008 low. While aggressive bulls entered the market off the 11,000 level, they quickly gave back most of their gains to the bears, who showed up off the key LIS of 11,634.82, where "old support becomes new resistance". Look for possible continued consolidation before the next move.

Daily chart better shows the resistance off the January 2008 low. While we had a short term buy signal early in the week (higher low), the week ended with a short term sell signal (lower high) in place. This is looking more and more like consolidation/trading range before the next move. Look to next week to determine whether the consolidation is complete, or whether it still has more to go.

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