Reversal Hits Dow Jones Industrial Average (.DJI) Industrial Average

Reversal Hits Dow Jones Industrial Average (.DJI) Industrial Average

Reversal Hits Dow Jones Industrial Average (.DJI) Industrial Average

The Dow Jones Industrial Average erased a 1.2% intraday gain near midday Wednesday. Other indexes were down in late morning trade after a negative reversal.

The day’s leaders were an unlikely bunch: IBM(IBM) gapped up 8%; Procter & Gamble (PG), 4%; and United Technologies (UTX), 3.5%.

All three stocks rose in heavy volume on strong earnings.

In late morning trade, the Dow Jones Industrial Average slipped 0.1%, while the S&P 500 and the Nasdaq slipped 0.5% and 0.6%, respectively. The small cap Russell 2000 shaved 0.1%.

Volume was running higher on the Nasdaq and lower on the NYSE.

Reversal Hits Dow Jones Industrial Average

The negative reversal was especially bad coming after Tuesday’s sell-off.

IBM reported results after Tuesday’s close, topping the Street’s views on earnings and revenue. The stock has been declining ever since Warren Buffett’s Berkshire Hathaway (BRKA) began selling in 2017. But IBM rebounded with the rest of the stock market after both IBM and the major indexes hit closing lows Christmas Eve. IBM is up 23% since then.

Procter & Gamble broke out of a base Nov. 5, spurted almost 7% and then dropped 4% below the 90.80 buy point. Investors who held the position are now up almost 5%.

Many investors regard IBM and Procter & Gamble as dividend plays. The annualized dividend yield for IBM is 5.1% vs. 3.2% for P&G.

Diversified play United Technologies, which makes everything from aircraft engines to climate control systems, popped above its 50-day line in the first 10 minutes of trade and then fell back under the line. In November, United Technologies announced it will break into three companies.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 25,647.18.

The projected lower bound is: 23,439.88.

The projected closing price is: 24,543.53.

Candlesticks

A black body occurred (because prices closed lower 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 27 white candles and 23 black candles for a net of 4 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).

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 77.5088. 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 58.45. 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 18 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 110.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 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 buy 14 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 171.139 at 24,575.619. Volume was 10% below average (neutral) and Bollinger Bands were 33% wider than normal.

Open High Low Close Volume___
24,577.25024,700.98024,307.17024,575.619 318,598,496

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

Moving Averages: 10-period 50-period 200-period
Close: 24,211.61 24,274.19 24,971.51
Volatility: 13 30 20
Volume: 311,597,536 369,250,016 328,175,616

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 1.6% below its 200-period moving average and is in an upward trend. Volatility is high 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 7 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.

You must be logged in to post comments :  
CONNECT WITH