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).

Friday, June 27, 2008

DJIA 6/26/08

MARKET BREADTH NYSE
Net Advancing Issues -2370
Net New Highs -391
Net Up Volume -1,928,631

TRENDS
*PROVISIONAL PRIMARY DOWNTREND | Directional wave | Prior support 11634 | Prior resistance 13136
*INTERMEDIATE DOWNTREND | Directional wave | Prior Support 11731 | Resistance 13136
*SHORT TERM DOWNTREND | Directional wave | Prior Support 12076 - Broken | Resistance 12320

TECHNICAL ANALYSIS
The market did not confirm yesterday's inverted hammer reversal pattern that gave rise to the possibility of a correction rally. Instead, it decided to move on and accelerate the decline in a big way closing lower by 3%. This illustrates the importance of waiting for technical confirmation of patterns which we emphasized in yesterday's post. Today's big move lower, though alarming on the surface, is not entirely unexpected, since we have been aware early on for weeks that the index is on a short term trend. Besides, even if the candlestick reversal signal was confirmed today, we were fully aware that any rally coming out of it would be merely a correction and should eventually resume its decline in the near term, so it's really no big deal. If we are to find any significance in today's huge drop, it is that the downtrend continues to gain momentum.

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