The Fight For 10,000 Points Continues...
The Dow closed slightly higher than 10,000 points again at 10,062 points, gaining 47 points today.
Yes, the fight for 10,000 points is on right now and don't let it fool you that the 10,000 points resistance zone has been broken just because the Dow closed 62 points higher than 10,000. There are two fundamental principles in technical analysis; Prudence and Significance. The 62 points break was not significant enough to call a breakout and it won't be prudent to assume as such. This is also why I keep using the term "resistance ZONE" and not the common "resistance level". There really isn't a clear resistance level on an exact price in technical analysis as traders trade around a certain price, not AT the certain price. This means that a strong resistance level would exert its influence on prices around that level creating a resistance zone within which more eager traders would take profit before that price is reached and greedier traders would venture to take profit when the level is slightly breached. Yes, we are in that resistance zone right now and even though the market was up again today, internals remain weak as decliners continue to par advancers. With the Dow once again in short term overbought condition, I won't be surprised to see the Dow pull back a little on Friday before trying again next week.
For now, the Dow remains in all out bull trend once again.
Yes, the fight for 10,000 points is on right now and don't let it fool you that the 10,000 points resistance zone has been broken just because the Dow closed 62 points higher than 10,000. There are two fundamental principles in technical analysis; Prudence and Significance. The 62 points break was not significant enough to call a breakout and it won't be prudent to assume as such. This is also why I keep using the term "resistance ZONE" and not the common "resistance level". There really isn't a clear resistance level on an exact price in technical analysis as traders trade around a certain price, not AT the certain price. This means that a strong resistance level would exert its influence on prices around that level creating a resistance zone within which more eager traders would take profit before that price is reached and greedier traders would venture to take profit when the level is slightly breached. Yes, we are in that resistance zone right now and even though the market was up again today, internals remain weak as decliners continue to par advancers. With the Dow once again in short term overbought condition, I won't be surprised to see the Dow pull back a little on Friday before trying again next week.
For now, the Dow remains in all out bull trend once again.
Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!
posted by Jason Ng at 5:53 PM
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