Dow Jones Industrial Average (.DJI) just entered a new bull-market phase

Dow Jones Industrial Average (.DJI) just entered a new bull-market phase

Dow Jones Industrial Average (.DJI) just entered a new bull-market phase

The bull market is dead, long live the bull market.

By some accounts, the Dow Jones Industrial Average DJIA, +6.37% just entered a new bull-market phase, killing the 11-day-old bear market. To some market participants that notion may, indeed, feel like a lot of bull.

It may be somewhat disingenuous to refer to the recent moves of a frenetic market as genuinely bullish, coming after the carnage that has been wrought at least partly by the coronavirus outbreak that appears certain to ravage the U.S. economy over the next several weeks and months — at least temporarily.

According to Dow Jones Market Data, the Dow’s recent moves, particularly over the past three days, have put it in bull-market territory. The Dow fell by at least 20% from its Feb. 12 peak on March 11, meeting the widely accepted definition for a bear market. Since the blue-chip index’s March 23 low at 18,591.93, however, the Dow has gained 21.3%, which meets the data team’s criteria for a re-entry into a bull market.

However, some market purists describe an asset as having exited a bear-market phase — and entered a bull phase — after putting in a new recent high. In other words, the Dow would have to exceed its Feb. 12 closing peak of 29,551.42 to achieve that, which means its bear-market condition is still in force.

Why would there be a divergent view as to what qualifies as a bull market?

It is important to know that there isn’t a standard arbiter for a bull market, nor is there one for a bear market, or a correction — a decline of 10% from a recent top. From a market technician’s standpoint, when an uptrend in an asset is so utterly destroyed, as it has been in stocks over the past month, a lot of work needs to be done to change its trend.

But this current, volatile phase of action for stocks certainly doesn’t feel to many like a bona fide bull run, even though it ranked as the best three days of gains for the Dow since 1931 and the best such stretch for the S&P 500 index SPX, +6.24% since 1933, according to DJMD.

For one, the Dow still stands 23.68% below its record high, the S&P 500 is down 22.33% from its Feb. 19 peak and the Nasdaq Composite Index COMP, +5.59% is off 20.57% from its recent all-time high.

Secondly, the Dow hasn’t registered a daily move of less than 1%, rounded, since Feb. 26, after a lengthy quiescent period in which a 1% move had become a rarity.

Thirdly, it feels as if the outbreak of COVID-19 has in some ways altered the complexion of the global market — and will continue to do so for some time.

Many parts of the world are currently shut down in an attempt to mitigate the spread of the pathogen, which has infected more than half-a-million people and claimed more than 23,000 lives as of late Thursday, according to data compiled by Johns Hopkins University. Confirmed cases in the U.S. rose to more than 82,000, topping the numbers in China and suggesting that more pain from the viral outbreak is on the way.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 25,789.13.

The projected upper bound is: 25,283.39.

The projected lower bound is: 19,565.45.

The projected closing price is: 22,424.42.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

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 91.6441. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 2 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 46.58. 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 2 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 34. This is not a topping or bottoming area. The last signal was a buy 2 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 0 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 1,351.619 at 22,552.170. Volume was 85% above average (neutral) and Bollinger Bands were 280% wider than normal.

Open     High      Low     Close     Volume___
21,468.38122,595.06121,427.10022,552.170 713,734,720
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 20,682.12 26,426.67 26,969.16
Volatility: 139 80 42
Volume: 808,375,360 496,129,696 316,509,472

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 16.4% below 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 23 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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