DJIA 10/2/2009

* Affirms the secondary uptrend in a pullback. Buying pressure is expected to appear anywhere between 9300 and 8900 level.


* The Jul09 uptrend remains intact but the shift in the slope of the trendlines betray its weakening. A breach below 9252 ends the advance and signals a potential retracement.
* Buying support could appear between 9218 and 8785 which is the fibonacci retracement of the Jul09 to Sep09 advance.
* The prior broken resistance that could serve as new support is 8877.


* Shows the index in a primary downtrend and the dow failing to breach the cloud of resistance.
* This could signal the end of the 6mo countertrend rally and could signal the resumption of the primary downtrend.


* For now, 9917 seemingly appears as the peak of the current 4 month cycle and the right translation suggests that likelihood of a higher trough that is anticipated to appear sometime Nov09.


* The index has retraced more than 38.2% of its oct08 to mar09 decline.
* It is customary for a major trend to resume its direction after a retracement of this magnitude.

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PRIMARY DOWNTREND - Oct08 to present
* Currently in a countertrend advance
* Support (prior) 6469 | Resistance (prior) 14198
* Potential resistance levels: Fibo retracement levels 9422-11246 | Ichimoku cloud 7750-9900
* Momentum shifts against the downtrend

INTERMEDIATE UPTREND - Mar09 to present
* Support (prior) 8250 | Resistance (prior) 8750 broken jul09
* Potential resistance 9917
* Potential support 8877 (prev broken resistance Jun09)
* Momentum supports the uptrend

SHORT TERM UPTREND - Jul09 to present
* Currently is a countertrend retreat
* Support (prior) 9252 | Resistance (prior) 9917
* Potential support: Ichimoku cloud 8900-9300 | Fibo retracement level 8785-9218 | Previously broken resistance of 8877

TECHNICAL ANALYSIS
The intermediate uptrend is on a collision course with the bigger primary downtrend. It is premature to say if the recent resistance of 9917 is the next lower peak of the big trend. A near term break below 8250 will increase such a likelihood. To get things into perspective, the primary downtrend can mark a new peak as high as 11245 and still remain in a healthy downtrend.

With that as a caution, there is no evidence to support the view that the intermediate uptrend is over. Even with the current downleg, the index can afford to register a near term trough of as low as 8800 and still be considered in a healthy uptrend. Technically, should that actually occur, and the Dow successfully breaks beyond 11245, the bullish argument that the Mar09 to present runup is the first upleg of a bull market is marginally strengthened.

The short term remains in an uptrend but momentum is clearly weakening evidenced by the shifting slopes of the up trendlines and the stark divergence of the MACD from the price peaks from Aug09 to present. It is likely that this current retreat is the start of a correction of the intermediate downtrend.

MARKET SENTIMENT
Aware of the countless possibilities of how this recent decline could play out, I choose to view it as the likely start of an intermediate correction as insinuated by its weakening momentum. Further, due to the bullish right translation of the current 4mo cycle, I expect buying support to appear between 9218 and 8785 thereabouts at which point the index reverses and resumes the intermediate uptrend.