Sunday, February 3, 2013

Going into next week: The Dow 2

The Dow managed to break, and hold, 14,000 last week. This is inline with my more optimistic prediction from last Sunday. So, what about this coming week? Below is the daily chart of the Dow.

www.freestockcharts.com

The trend lines are the same that were on the weekly chart. Notice the circled area, the price broke and then bounced off the top line. The bounce is important, it shows that the trend line is now acting as support, though how strong it is is hard to say. Friday's candle was larger than the two before it combined, this is a good sign. What needs to be watched for this coming week? First, the price action should not break below the top line. If it does, and closes under it, this could be a sign of a minor correction down to the 100 day or maybe the bottom line. Next, the price should reach a new high. If it doesn't manage to break the 14,009 mark it could be a sign of coming weakness. I wouldn't consider it to be an actual bear signal until it breaks and closes under the top line. That top line is currently at 13,843. This is about 150 points under the current price.
I see three likely outcomes for next week. First, we move to 14,200, the current major ceiling. Second, we move back to the top line and then bounce off it ending the week slightly positive/negative. Lastly, we could move back to the top line and break through it moving down to probably 13,700 or so, depending on when we break to the downside. Like last week I'm going into this one with cautious optimism. I think we'll probably do one of the first two likely outcomes but anything is possible.

If you have a stock you want analyzed leave it in the comments. 

Do your own research before taking any position. I do not currently own any DJ-30 and do not plan on buying any within the next 72 hours.

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