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by James Kupfer
The Dow Jones 30 is nearing a critical test area. A significant top is likely very near.
Position: Sell
James Kupfer
Mr. Kupfer is a market professional and amateur stock market commentator. Disclosure: It is likely that Mr. Kupfer has or will enter a position in any security he writes about.
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CHANNEL LINES
Resistance Is Near
03/19/09 08:22:16 AMby James Kupfer
The Dow Jones 30 is nearing a critical test area. A significant top is likely very near.
Position: Sell
| In the last two "DJ Vu" articles, I explored the structural similarities between the Dow Jones Industrial Average (DJIA) in 1929–32 and today's bear market. Now, I want to step back and examine the current market setup from a traditional technical analysis perspective. |
| In Figure 1, you can see a declining trend channel drawn in red that started in September 2008. Also shown is a former resistance line from the November 2008 lows. Once the market descended past that level, it turned into a resistance level. We will examine a close-up view of these levels on Figure 2. |
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| FIGURE 1: DJIA, DAILY. A big-picture view of the current technical picture. |
| Graphic provided by: Wealth-lab. |
| |
| In Figure 2, you can see a more detailed view of the two chart elements I mentioned. The red channel line is currently around 7550, while the November resistance line is at 7450. In addition, the 38.2% Fibonacci resistance line is nearby at 7470. This is the same resistance line I discussed in the DJ Vu articles. |
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| FIGURE 2: DJIA, DAILY. A linear regression channel shows the current path up. |
| Graphic provided by: Wealth-lab. |
| |
| While the DJIA is in a strong uptrend, there are three significant resistance levels all within 100 points of one another. It seems likely that the DJIA will continue up to test the 7450 to 7550 levels, but that test will ultimately fail. |
Mr. Kupfer is a market professional and amateur stock market commentator. Disclosure: It is likely that Mr. Kupfer has or will enter a position in any security he writes about.
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Date: 03/20/09Rank: 5Comment:
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