US DOW: May Go Higher in This Correction Phase

The world continues to watch the efforts taken by the US government to help the ailing US finance and economy. Recently the government added another US$800billion financial “bailout” package in addition to the already allocated amount of US$700 billion. It has certainly been a year of bailouts in the US as finance giants start to collapse one by one. US President-elect Barack Obama waited no longer and have already started to form a think-tank team to battle the weakening economy, lead by former Fed chairman.

Despite the relentless effort by the US government to battle the financial problems, investors in the US are still not confident. The DJI went to test and break the 8,000 points support level but immediately found another support at 7,500 points. The DJI has been trading in a sideway range and is currently at 8,829.04 points. Despite this shortfall, the RSI indicator shows a positive divergence on the chart and this means that the DJI may go higher in this correction phase, probably test the 9,600 points resistance level created this month. However, be prepared for another bear run if the DJI falls below 8,000 points because that’s the confirmation of the down trend.


Daily DJI chart as at 8 December 2008 using NextVIEW Advisor. Click on chart to view enlarged chart.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

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