DJIA, 2/13/08

PRICE AND TURNOVER

Close: 12,552.24

Change: +178.83 (+1.45%)

Volume: 653,580,224

MARKET BREADTH (NYSE)

Net adv/dec issues: +1,108

Net new highs/lows: -49

Net up/down volume: +2,130,604,280

OUTLOOK

The Dow is on its third day of advance. It opens weak but quickly recovers when the buyers take control in early trading driving it to a higher close near the highs and on an uptick. On the intraday timeframe, the 12500 level proved to be significant acting as resistance near the open and then reversing its role as support about an hour before the close. Most of the breadth indicators display wide participation in today's advance though it is quickly rebuffed by the declining volume accompanying the three day rally. Looking at the daily timeframe we see the index testing the trendline resistance. It is interesting to note that a higher low has been formed when the Dow found support last Monday. Textbook technical analysis consider this price action as a provisional uptrend but in the context of the bigger downtrend, this should be viewed with suspicion or at the most an alert to take a closer look at how the move plays out. At this point, the next critical level to watch out for is the trendline resistance. A successful break above it will be encouraging though I will not consider that a buy signal. A bounce off the trendline will confirm that the downtrend remains healthy.

(Charts excluding annotations sourced from Stockcharts.com and Reuters.com)