US Dow Jones Industrial Average - Up trend may hold

The US equity market has been quite volatile in the past few weeks with mix reaction towards to declining commodities prices and strenghtening of the US Dollar but generally the US performed quite a good since last month when the benchmark Dow Jones Industrial Average (DJI) was at around 11,000 points. As at 15th August this year, the DJI closed at 11,659.90 points after testing the 11,700 points resistance level.

The DJI did managed to close above the 11,700 resistance level. for 2 days in the past two weeks but was not able to hold above it. Will the DJI continue its up trend?

In my opinion, as long as the DJI is able to stay above the short term 30 day moving average which has turned upwards recently, it may climb higher to test the next resistance level at 12,200 to 12,300 points, where the long term down trend resistance level is. This is also because momentum indicators like RSI are supporting the current short term up trend.

Yes, the DJI and the rest of the markets around the world are still in a down trend (in the longer term) and more positive catalyst are needed in the equity markets before it can challenge the down trend.

Immediate support level is at the 30 day moving average and it is currently at 11,400 points while stronger support level (crucial support level) is at 10,800 points.


Daily DJI chart as at 15 August 2008 using NextVIEW Advisor

Commentary and Analysis by Benny Lee