US Dow Jones have to pass through 8,000 to overcome bears

The US market has rallied more than 13 percent after a technical rebound when the Dow Jones Industrial Average (DJI) went to as low 6469 two weeks ago. Yesterday, the DJI rose 178.73 points or 2.5 percent to close at 7395.70 points. Improve housing data led to some investors confidence, causing stocks of homebuilders and banks to climb.

Do not be fooled by thinking that the US market may be out of the down trend. It first need to pass through the 8,000 points resistance level to get out of the bear trend. The down trend of the DJI is defined by a 70 day moving average (see chart) and it is currently at 8,000 points, which was also the previous support level. The momentum of the down trend can only be overcome by a rally above this level. If not, it may just be another pull back of a strong down trend.


Daily DJI chart as at 17 March 2009 using NextVIEW Advisor. Click on chart for larger view.

Yesterday, other indices were positive as well. The broader S&P 500 index went up 3.2 percent to 778.12 and the Nasdaq composite index rose 4.1 percent to 1,462.11. Price of crude oil nears $50.

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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.