US DOW: Strong bullish momentum but still in correction

Better than expected corporate earnings and imports have led to positive market speculations that drive the DJI from a low of 6,600 points to the current level of 8,017.59 points. The market finally rebound after 2 months of bearish movement. The 21% increase from the low a month ago has provided positive vibes to investors’ sentiment all around the world. However, analysts are worried about the sharp increase which forms like a V shape on the chart may be unsustainable.


Weekly DJI chart as at 3 April 2009 using NextVIEW Advisor. Click on chart for larger view.

The DJI is currently right on the long-term 90-day exponential moving average. This may provide a resistance to the DJI and furthermore, the stochastic indicator indicates that the DJI is very overbought and the market is expected to pull-back from the current up trend rally soon. The RSI and MACD indicator indicates strong bullish momentum and there is a high chance that price can continue the up trend after a correction. The DJI needs to break and stay above this moving average to continue the up trend but at the moment, the market is still in a sideways consolidation and is expected to stay this way until further buying.

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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.