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).

Thursday, May 22, 2008

DJIA 5/21/08 STOCK MARKET TECHNICAL ANALYSIS


The index retreats for 2 consecutive days in a big way. If the chart was a control panel, lights will be blinking and horns blaring. The following technical signals were simultaneously issued today: (a) a break of the short term up trendline, (b) a break of the prior support of the minor trend, (c) a relapse of the index below the previously broken intermediate down trendline, and (d) a break of previously significant support and resistance levels in the intermediate trend. The following potential future scenarios are implied by today's price action: (1) a short term consolidation or non-directional movement, or (2) a short term reversal into a new downtrend (2.a.) that goes beyond 11731 and leads to a re assertion of the previously interrupted intermediate downtrend, or (2.b.) that ends somewhere near 12,270 (Fibo retracement) and subsequently reverses upward to establish a higher high and a provisional uptrend for the intermediate time frame. In any case, today is a clear sell signal for those who align their trades with the short term trend.

TRENDS
* PRIMARY UPTREND | Corrective wave | Prior support 11634 | Prior resistance 14030 |
* INTERMEDIATE DOWNTREND | Directional wave | Prior support 11634 | Prior resistance 13780 | Relapse below the previously broken down trendline | Break of important support level | Price objective 11634 |
* UNDEFINED MINOR TREND | Downswing | Prior support 12269 | Prior resistance 13136 | Break of the up trendline | Break of prior support | Price objective 12269 |

PRICE AND TURNOVER
Close: 12,601.19 * Change: -227.49 (1.77%) * Volume: 860.5M

MARKET BREADTH
Net Advancing Issues: -1282 * Net New Highs: +49 * Net Up Volume: -2,920,346,147

STOCK MARKET, ECONOMY & OTHER HEADLINES
AP|Stocks tumble on $134 oil, Fed meeting minutes|Wed May 21, 7:46 pm ET
AP|Fed sees slower growth, higher unemployment in `08|Wed May 21, 5:20 pm ET
AP|Oil prices pass $134 after report of supply drop|Wed May 21, 6:33 pm ET

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