A couple weeks back, I took a look at the Dow Jones Industrial Average and shared my thoughts on how the rest of January may play out. Is this a final rally of a soon-to-be trading top?
I think so. Here are two excerpts from my prior article:
“…the short-term trend line for the Dow Jones Industrial Average was lost recently. This is simply a caution signal and necessary price supports need to be identified (see my tweet from Tuesday morning below). At the same time, we have to understand that it is not uncommon for a trend line to be back-tested (even while setting new highs) – and this may be the area to further de-risk / sell into.”
“…You can see that price is moving higher and testing its all time highs. A move over those highs would target a high over 29000 and potentially as high as 30000. Several trading cycles are pointing to mid-January as an interesting time.”
Note that the following MarketSmith charts are built with Investors Business Daily’s product suite.
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Dow Jones Industrial Average “daily” Chart
The chart below is the same as the one we shared on January 8. I believe we are retesting that broken trend line and are likely to see a deeper pullback begin shortly. Markets like big round numbers and 30000 seems to be serving that purpose for the Dow Industrials.
Note this is a near-term analysis. On broader time frames the trend is in tact and bullish. It would only become a concern if the 50 day moving average was lost (around 28200-28300).
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.