Sunday, September 21, 2008

$INDU Update for 09.21.2008


Monthly chart shows lower low made, where the bottoming tails indicates support and buying from aggressive bulls. While the index has sold off and made a new low, the market managed to regain most of the losses made during the month. Index remains below the key LIS and important level of 11,750.28. No buy signal/pattern evident on this timeframe as of yet.

Weekly chart shows regular divergence with the lower low made this week. The trading activity left the index closing pretty much where it opened for the week. The candle pattern, long legged doji - indicates indecision between the bulls and the bears. Index remains below the January 2008 low for now. No buy signal/pattern evident on this timeframe at this time. Look to next week's trading activity for better sense of longer term sentiment.

Daily chart shows that the initial three wave consolidation pattern finally broke down. The market found support near the 1.27 fib level, completing 5 waves down. The pattern created with the 1.27 fib support level created a bullish butterfly pattern, where the index rebounded strongly, after the AIG bailout and the temporary banning of short selling in 799 financial stocks. Current resistance is right at a .382 fib level. We are not out of the woods yet, as the market could still be stuck in a large consolidation/trading range. What we have is probably a tradeable bottom for now.

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