This blog is committed to the serious study and valid understanding of technical analysis and its objective application to stock selection, risk management and execution primarily in the context of trading stocks listed in the Philippine Stock Exchange (PSE).

Tuesday, February 26, 2008

DJIA 2/25/08 TECHNICAL ANALYSIS



PRICE AND TURNOVER
Close: 12,570.22
Change: +189.20 (1.53%)
Volume: 746,891,976

MARKET BREADTH (NYSE)
Net adv/dec issues: +1,793
Net new highs/lows: -1
Net up/down volume: +2,700,293,884

TECHNICALS
Intermediate downtrend, short term consolidation
Support 12,000 Resistance 12,800

OUTLOOK
The Dow rallies for a second day picking up another 189pts from where it ended last Friday. Market indicators show broad participation in this uptick but volume contraction is a mood killer. We see a number of technically significant things happen today, i.e. (1) a penetrating close outside the symmetrical triangle-being a continuation pattern, this breakout is usually viewed as a heads up for near term move as long as it breaks in the direction of the prior trend, but since it didn't I will view this particular evidence with caution, (2) a break of the intermediate trendline-a trendline break is a typical early signal that the trend may be changing, and (3) a possible new and higher support level of 12,200-a higher low is a signal that a new provisional uptrend may be in the offing. All of these things point to a high odds near term advance. The next critical level to look out for is the 12,800 level where we can get a take on whether this move will morph into a new short term uptrend or merely unfold into a range pattern.

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