US Dow Jones Industrial Average (DJI) – Healthy trend, but weaker momentum

The US equity market continues its bullish trend with a marginal increase. The DJI closed 4% higher month-to-month at 9,544.20 on Friday. Increase in housing sales, better than expected corporate earnings and positive statements from the central bank boost investors’ confidence. Investors were trading cautiously as the job market has not been improving much. The market has been supported well. For many days, the market started with a bearish note but turned bullish in the later session.


Weekly DJI chart as at 28 August 2009 using NextVIEW Advisor

Momentum indicators have been in convergence with the current upward rally. RSI and Momentum indicators are able to stay above its middle level and the ADX indicator started to rise again. This means that the uptrend is still strong and there is a high chance that the trend may continue to go higher. The inverted heard and shoulder chart pattern was confirmed when the DJI broke above 9,400 points and this pattern has a price target at 11,600 points. However, there is also a technical resistance at 10,330 points. However, if the benchmark index fails to stay above the immediate support level at 9,100 points, then we may see further correction downwards.


****

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.