Dow Jones Industrial Average (.DJI) appear in position to exit correction territory

Dow Jones Industrial Average (.DJI) appear in position to exit correction territory

Dow Jones Industrial Average (.DJI) appear in position to exit correction territory

A new year, a new market. The Dow Jones Industrial Average and the S&P 500 appear in position to exit correction territory if a multiday rally on risk assets continues apace.

The Dow DJIA, +0.39%  and the S&P 500 SPX, +0.41%  marked a fourth straight gain, at least partly attributed to optimism around three days of talks intended to resolve a protracted dispute around tariffs between China and the U.S., and growing signs that the Federal Reserve is ready to dial back what has been perceived as an aggressive rate-hike path.

It was concerns over trade and rising rates, and worries that global growth was receding with the U.S. was on the verge of a recession, that shattered investor confidence, and drove the stock market down from an autumn peak.

Anxieties around those matters, however, have subsided somewhat, with the Dow knocking on the door of exiting correction, at least by one measure.

A correction is usually defined as a drop of at least 10% from a recent peak. Some market-technician purists believe that an asset must put in a new high to officially emerge from a correction phase, while Dow Jones’s data group views an exit from that phase after it gains 10% from the correction low. Read more about market corrections

The Dow needs to close at or above 23,971.42 to emerge from correction, by that measure.

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 24,333.21.

The projected upper bound is: 25,003.76.

The projected lower bound is: 22,710.26.

The projected closing price is: 23,857.01.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 90.6167. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.43. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 9 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 131.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 91.670 at 23,879.119. Volume was 8% below average (neutral) and Bollinger Bands were 40% wider than normal.

Open High Low Close Volume___
23,844.27023,985.44923,776.56123,879.119 324,574,336

Technical Outlook
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 23,307.07 24,450.46 24,962.29
Volatility: 37 31 21
Volume: 358,438,304 386,293,472 334,387,968

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 4.3% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .DJI and have had this outlook for the last 19 periods.

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