Dow Jones Industrial Average (.DJI) may have its toughest tests ahead

Dow Jones Industrial Average (.DJI) may have its toughest tests ahead

Dow Jones Industrial Average (.DJI) may have its toughest tests ahead

The Dow Jones was able to avoid a serious retracement last week but may have its toughest tests ahead. Earnings season is set to kick off on Tuesday with the country’s largest banks when JP Morgan, Citigroup, Wells Fargo and Bank of America release their quarterly results, followed by a string of other high-profile earnings to round out the week. In total, more than 15% of the Dow Jones will divulge their fourth quarter performances to the public. On a single-stock basis, this will be the most important theme to watch.

As for the index as a whole, Wednesday’s repo schedule announcement and Thursday’s reported US-China Phase One trade deal signing are poised to be the headline issues. An aggressive balance sheet expansion since September has allowed for the Industrial Average to reach new heights – combined with the euphoria brought about by the initial announcement of the trade deal. If either of these themes are threatened, it could work to erode the Industrial Average.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 28,004.15.

The projected upper bound is: 29,278.69.

The projected lower bound is: 28,438.95.

The projected closing price is: 28,858.82.

Candlesticks

A black body occurred (because prices closed lower 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 30 white candles and 20 black candles for a net of 10 white candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with DJ INDU AVERG). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 78.6788. This is not an overbought or oversold reading. The last signal was a sell 8 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 62.41. 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 sell 5 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 145.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 5 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 1 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -133.131 at 28,823.770. Volume was 5% below average (neutral) and Bollinger Bands were 24% narrower than normal.

Open     High      Low     Close     Volume___
28,977.52029,009.07028,789.10028,823.770 239,170,880
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 28,696.23 28,059.95 26,833.13
Volatility: 12 10 14
Volume: 240,417,520 249,307,408 262,896,128

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 7.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .DJI (mildly bullish). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 20 periods.

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