Dow Jones Industrial Average (.DJI) It’s A Stock Market Correction

Dow Jones Industrial Average (.DJI) It’s A Stock Market Correction

Dow Jones Industrial Average (.DJI) It’s A Stock Market Correction

Dow Jones futures fell modestly Sunday evening, along with S&P 500 futures and Nasdaq futures. A stock market correction began last week due to heavy selling in the major averages and leading stocks. In a stock market correction, investors should largely stay on the sidelines but remain engaged and build their watch lists. Pay attention to top stocks that are holding up well, such as Apple (AAPL), Microsoft (MSFT), Ulta Beauty (ULTA), UnitedHealth (UNH), Boston Scientific (BSX) and O’Reilly Automotive (ORLY).

All of these are on the Relative Strength At New High list except for UnitedHealth (UNH), whose RS line is just below a record high. The RS line tracks a stock’s performance vs. the S&P 500 index. UnitedHealth reports third-quarter earnings this week, the first of the highly rated Medical-Managed Care group. UnitedHealth, Apple stock and Microsoft stock are all Dow Jones components.

For a confirmed stock market uptrend, the major averages must rise over several days, with at least some strong gains in heavy volume. Friday’s rally was positive. But one good day isn’t enough to end a stock market correction. Many of history’s greatest percentage gains have come in down markets.

So far in October, 194 of the 197 industry groups that IBD tracks has lost ground. Many top groups and sectors have suffered major losses.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 25,921.33.

The projected lower bound is: 24,759.21.

The projected closing price is: 25,340.27.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 12.9609. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 6 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 34.31. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -189.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 sell 5 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERAGE closed up 287.160 at 25,339.990. Volume was 39% above average (neutral) and Bollinger Bands were 64% wider than normal.

Open High Low Close Volume___
25,407.63125,467.55125,000.83025,339.990 397,514,624

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 26,223.70 25,989.75 25,142.91
Volatility: 24 14 19
Volume: 324,761,760 270,439,200 351,098,272

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 AVERAGE is currently 0.8% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 2 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.