Dow Jones Industrial Average (.DJI) quick rebounds loom large in the minds of traders
Convinced the stock rout is over? It has occasionally felt like it, on days like Friday, when the Dow Jones Industrial Average soared almost 750 points. Isolated examples of quick rebounds loom large in the minds of traders, or at least those whose careers go back more than a few years.
But even in a benign scenario — one in which a bear market is avoided and the Boxing Day low in equities is preserved — it’s wise to remember that bottoms usually take much longer to form than they have so far in the S&P 500 Index.
From U.S.-China trade tensions to uncertainty over Federal Reserve monetary policy, issues that were at the center of the fourth-quarter equity rout haven’t gone away. Meanwhile, bad news keeps creeping in. Apple Inc. and Delta Air Lines Inc. just joined a growing list of companies in cutting financial forecasts, reinforcing fears that a slowdown in 2019 profits may be worse than analysts anticipated.
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 24,392.36.
The projected upper bound is: 24,574.44.
The projected lower bound is: 22,216.51.
The projected closing price is: 23,395.47.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 76.3910. This is not an overbought or oversold reading. The last signal was a sell 0 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 46.57. 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 6 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 24. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.
Rex Takasugi – TD Profile
DJ INDU AVERG closed up 746.939 at 23,433.160. Volume was 14% above average (neutral) and Bollinger Bands were 70% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 22,896.99 24,521.68 24,967.16
Volatility: 47 31 21
Volume: 439,381,504 394,219,552 335,832,256
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.
DJ INDU AVERG is currently 6.1% 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 moderate flows of volume out of .DJI (mildly bearish). Our trend forecasting oscillators are currently bearish on .DJI and have had this outlook for the last 16 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.