US DOW (DJI) – Fails to break resistance

The US equity market has been bullish last month but at a slower pace. In March the DJI increased 17.3 percent on-month but the increase in April is 3.8 percent. The DJI closed at 8025 points on Monday, falling 51.29 points amid declines in the Asian and European markets. The sentiment boost because of improvements in short term economic data in March has started to ease. The DJI failed to break above the intermediate down trend resistance line. The increase in the equity market does not reflect the improvements in the economy as analyst said that the economic recovery is still not within sight. Investors are being more cautious now.


Daily DJI chart as at 27 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The DJI is currently hovering just above the short to long term 30 to 90 day moving averages. The long term trend is still bearish because the longer term 60- and 90-day average is still declining. The short term uptrend momentum has started to become weak. Since early April the RSI indicator is in divergence with the DJI. Resistance has become obviously strong. Therefore, expect the down trend to continue to the support level at 7,000 points if the DJI fails to go above the current resistance at 8,170 points.

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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.