Monday, January 24, 2011

Dow Jones- Is this Bull Run Over?

I believe this is a billion dollars question that everybody would like to know the answer. Honestly, I do not have a 100% correct answer, and I can assure you that nobody else have the 100% answer.

I at The Market Oracle will try to give you the best answer possible. I have more than 10 years of Technical Analysis experience, although, I may be wrong at some time, but based on the technical analysis for DJIA(short and long term) below, I hope I can to predict the direction for DJIA going forward.
 Long term technical analysis:
 Click on the above chart to enlarge
Based on the long term technical analysis, DJIA has already broke the long term upward range on June of 2010. However, it manages to find its 1st support and climb back up to the current level of 11,894.
It is currently testing the 1st resistance which I believe will be broken very soon.DJIA is currently consolidating and will be making its upward surge. DJIA will gather its bull strength to test the 2nd resistance which is at the 13,000 level, which I believe will hard to break. The last time DJIA flirt with this level is on May 2008 which is about 2 years ago. And the 3rd and final resistance is at 14,000 which is tested by DJIA on Oct 2007.


Click on the above chart to enlarge

The short term chart shows that DJIA is currently going through a very smooth upward move, 3 of the technical indicators (MACD, Stochastic, and Bollinger Band)  that I have always relied on show a neutral signal. Based on this very smooth upward move by DJIA, I will predict that DJIA will continue its bull run until it hits the 2nd resistance level at 13,000 as similar to the long term chart analysis as per above.

Both long and short term technical analysis show, I will predict that DJIA will continue its upward move until it hits the first resistance at 13,000. If it can break this level, I will predict that it will go to test the biggest and 3rd resistance at the 14,000 level. Once it touches with the 14,000 level, it will hit the climax and will reverse its trend and will go down from there to form a double top formation. 

I hope that this technical analysis will be able to help some of you especially for those who bet on indexes. Good luck and happy trading. 

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Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence. 

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2 comments:

  1. Dow can surge to 12000 levels before cracking down, most the stocks are looking tired, its time to be cautious on longs. please visit http://www.kalpeshmaniar.com for accurate forecasting of markets.

    ReplyDelete
  2. The intermediate market cycle indicates it is time for a correction...

    To what extent, I do not know, however, I suspect somewhere in the 5 to 7% range...

    ReplyDelete

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