US markets fell, expected fall further

The Dow Jones Industrial Average (DJI) fell by nearly 250 points yesterday, wiping out a gain of about 200 points seen Friday. Investors shifted to bonds, to the safety of government debt. The equity market was light trading.

In my previous analysis on the DJI, I mentioned that the short term up trend may hold if the DJI is able to stay above the immediate support level of 11,400 points. The DJI was below this level early last week and tried to go back into the up trend by climbing above this level on Friday. However, the DJI is now back below this 11,400 points level again, closing at 11386.25 points yesterday.

This shows that the bears are still in control and technically, the up trend momentum has started to weaken (the RSI indicator has started to fall flat). A weak momemtum in the up trend signals a possible change in trend.

With this weak momentum, and strong resistance (which is still at 11,700 points), the DJI is expected to fall further to test the support level of 10,800 points again.

Analysis and Commentary by Benny Lee