Stock Incubator

[dalcindo]

Re: $INDU Daily: bearish 100 x 34 MA cross

Hi, TTG!

Your 100x34 MA signal is pretty powerful, especially when you put it in its historical context (e.g.: The last time the $INDU got a 100 X 34 MA bear cross was actually a really good time to jump out of the market, summer 2008, about 2 months before the Lehman Bankruptcy......Then at the 34 X 100 MA bull cross it was a great time to get back in (early May).....Now finally after nearly a year we are getting a 100 X 34 bear cross again...).

I agree with you here, that the long-trend remains bearish and that the recent rally may fatigue as it nears its recent historical high. Technically, this would achieve a bearish double top worth heeding.


FUNDIES:
Counter-current to this technical development are the recent optimistic US economic data, which are behind that rally as the charts are nearing a breakout. Although I am a pure technician and trade strictly out of the charts, I like to pay attention to the fundamental noise around.

Of the most discreet fundamental noises are data reflecting the impact on consumers. In fact, US retail sales report on Friday 12 MAR 2010 represents the next risk event that should spark more energy up or dampen it all, as large traders are likely to look at this for near-term and mid-term market direction.



TECHIES:
Chart-wise, the 10600 level that you have highlighted may provide some early indication whether institutional buying pressure is gearing up towards a market breakout, but the 100-34 MA in your chart remains the truth serum, IMHO.

Other technical event in the charts are the overbought conditions in RSI and MACD; decreased volume trend since DEC 2008; and BEARISH ascending wedge formation (or possibly a bearish ascending flag with pole represented as the three large bearish candles since High of January), both of which represent bearish continuation pattern, suggesting a resumption of the major bearish trend.

Can't wait for next week. Please, keep posting that and other charts. Besides being really nice, I am very curious to see how that 100-34 MA unfolds.

Thank you!

- Dalcindo