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The DOW Market Technical Analysis Review

Oct 4, 2009 Technical Analysis

Last week was all in favor of the bears for a change as the bulls have dominated the market for the past 8 months. The last earnings season stocks sold of prior to announcements and made a very bearish breakdown of a head and shoulders pattern that turned into dust once earnings were released and positive cost cutting results provided better than expected numbers across the board.

It appears that we are heading into the same ally as last season with stocks selling off as investors are in fear of what the results could be. As cost cutting can only take a company so far we want to be looking for revenue growth now. We want to see that these companies aren’t posting profits only because they fired half of their staff. We want to see expansion once again and the sales numbers on the rise. Its hard to say what the results are going to be and one can only speculate. I have not a damn clue what the results might be. I don’t hold stocks through earnings anyways so i’ll play the results as they come, not try to predict them. Its the idiot analysts that think they’re gonna make a great call on a stupid gamble that get burned. Sure some succeed, many don’t.

Technical Analysis:

The DOW broke done some heavy support last thursday breaking below 9600 with a huge 203 point swing for the bears bringing in a lot of momentum to the downside. Yet now we are sitting on a short term ascending trendline support with a small bullish hammer candle formed suggesting that we could see a near term rally. Based on technical analysis my best assessment would be that from here we will rally to re-test the breakdown resistance around 9600 which is also near the 13ema. Thus after continuing bearish momentum and head down near longer term ascending support of the larger ascending wedge pattern. Which would be around 9300.

DOW29

Although, just as last earnings season in July the technicals can turn on a dime based on hype and momentum from what kind of sentiment we get on the day to day with earnings being released.

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This entry was posted on Sunday, October 4th, 2009 at 10:06 pm and is filed under Technical Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
  • fous
    ur an idiot... ive made no wrong assessment.. the market rallied off this short term support as i stated it probably would in the illustration and re-test descending resistance which is what it peaked around today forming a symmetrical triangle (unbroken). And we dont even know yet if this rally will hold its been 2 days since this post was made. And secondly i never and will never say "what the market will do" because that would be claiming to be psychic. and as i stated

    "Although, just as last earnings season in July the technicals can turn on a dime based on hype and momentum from what kind of sentiment we get on the day to day with earnings being released."

    Next time you comment try not to look stupid.
  • aadur
    As this week's market action has shown the conclusions drawn in the above article are incorrect! The writer has made a error in assuming that breakdown of the red line drawn is sufficient for the market to break down and correct fruther at this stage. If the writer had instead focused on the fact that the market has been trading up the channel between the two black lines he has drawn, he would have reached a different conclusion and been more bullish at least in the short term. This market has been confounding to the bears to because they have ignored two basic tenets that I learned many years ago:
    1. You cannot fight the Fed when the Fed has induced a "loose money" policy.
    2. Many of the bears think we will get inflation because of the loose money policy but ignore the fact that the velocity of money flow is slow and we have deflation in the economy! Rather than relying on one indicator in technical analysis it is prudent to use several and not forget fundamental analysis as well when drawing conclusions.
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