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).

Wednesday, April 2, 2008

DJIA 4/1/08 STOCK MARKET TECHNICAL ANALYSIS

The Dow surges ahead by almost 400pts (3.2%) closing at the high accompanied by rising volume. This market advance occurs amidst news accounts about Lehman Bros and UBS [AP Tuesday April 1, 5:50 pm ET], a US Dollar rally [AP Tue Apr 1, 2008 12:06pm EDT], Manufacturing and Construction Data [AP 01 Apr 2008 10:07 AM ET], and Automakers Sales Data [AP 01 Apr 2008 03:25 PM ET]. Today's price action confirms that yesterday's low of 12176 is a new near term support under which we redraw the short term advancing trendline. It also invokes the intermediate trendline's capability to switch roles from resistance to support from where it launches a new upleg after a 7-day pullback from the initial breakaway that occured Mar-24. The interruption of the intermediate trend shifts the trader's focus to the prior resistance of 12,800 the significance of which i discussed extensively in one of my recent posts [see DJIA 3/24/08...] . If the index hits this level I will be anxiously watching for a potential completion of the double bottom formation.

MARKET BREADTH
Net Adv Issues: +2280 * Net New Highs: +13 * Net Up Volume: -335,742,400

TECHNICAL ANALYSIS
Primary consolidation * Secondary downtrend * Short term uptrend * Support 11,600-11,700 * Resistance 12,800 * Rounding top on the weekly chart * Potential double bottom on the daily chart * Short term trendline redrawn to accomodate new support.

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