Looking Further Ahead...

The Dow had hell of a month so far with a lot of volatility wrapped up in a nice dose of optimism and bullishness leading to the short term bull trend that we have experienced so far. However, those of you who have been following what I say very closely recently would notice that I have been using the term "Short Term Bull Trend" instead of an outright bull trend... why is that so? This is where we need to look further ahead for the answer. Looking at the Weekly chart for the Dow, we can clearly see that this "Short term bull trend" is actually a short term relief rally within the framework of a primary bear trend! Yes, this primary bear trend started way back in Oct 2007. Every relief rally within this framework has found resistance at the weekly 30MA (the white line in the picture below). This means that we should see a resistance for this short term bull trend at about 12200, which is still quite a lot of gain away. :) Whether or not the Dow could breakout into a real primary bull trend is a question to be answered later as the situation unfolds. For now, the short term bull trend seems strong enough to move further upwards as short term bond yields rise reflecting short term optimism.

Learn about Stock Options.


Dow Technical Chart By FREE Charting Software TC2007! Download Now!