The Dow Jones Technical Analysis - A Specialist in Technical Analysis

For Dec, 11 2014

(Individual Chart Analysis)

This is a no-frills analysis.  It is not designed to look good, it is designed to be effective. 


Summary of the Technical Analysis for the DOW

(This takes into account the near term, mid term, and longer term charts)

Our combined analysis for Thursday tells us to respect support, but also initial resistance, the resistance line that was established in the final hour of trading on Wednesday.  The markets tested support twice, check the near term charts for evidence, but after the first time they bounce and threatened to move higher aggressively.  The bounce was indeed a nice bounce, about 10 points in the S&P 500, but then the S&P 500 turned down and gave back those gains much faster than it realized them.  However, two things happened in that process.  First, the second decline that took place caused the market to test support a second time, so now we have a double test of support.  Second, we also have a resistance line that could be an upside confirmation catalyst if it breaks higher.  Therefore, if the markets hold support and they increase beyond the highs that were set in the last hour of trading on Wednesday we could see aggressive market increases, but we should also moderate our expectations.  Right now, both the Dow Jones industrial average and S&P 500 are in downward sloping near-term and midterm patterns, which suggests that lower highs are likely if support holds.  Although an increase to those lower highs would be aggressive because the differential between support and resistance is itself quite large, we must it knowledge the fact that resistance is currently a lower high.  Still, the patterns that took place late in the day on Wednesday offer catalysts for Thursday's trading session, beginning with a double test of support, which solidifies support as an important inflection level, and then the resistance line, the highs that were set in the last hour of trading on Wednesday, which could act as an upside confirmation catalyst if they break higher.

Initial intraday trading parameters for the DOW exist between17515 - 17597
If 17515 breaks lower expect 17286
If17597breaks higher expect 17760
Otherwise expect17515 - 17597 to hold

If 17515 remains in tact as initial support, expect the market to increase to 17597. This reflects a tight near term down channel. However, and in line with our combined analysis, if 17515 breaks lower instead expect the market to decline to 17286 before it stabilizes again.


NEAR Term Analysis

Our combined near-term analysis tells us to expect the market to begin the day with a bias to increase if initial support levels hold.  The markets tested initial support, then bounced, but failed to follow through and instead fell back to test support a second time in the final hour of trading on Wednesday.  This presents a pattern that could tell us either if the market will break down or continue to increase.  If the market breaks support then further declines should be expected, but if the market holds support and then increases beyond the intra channel resistance levels that were established in the last hour of trading on Wednesday aggressive increases can follow.  Our near term chart patterns are therefore very important as they will likely tell us what will happen going forward.

NEAR Term Support for the DOW exists at 17500

NEAR Term Resistance for the DOW exists at 17597

Dow_5_day


MID Term Analysis

Our combined midterm analysis tells us that all markets, except the Russell 2000, closed at their respective support levels.  The S&P 500 and Dow Jones industrial average are in downward sloping trend lines and support was tested there, and the neutral trend line of the NASDAQ was also tested.  The support lines are very important and if they remain intact we should expect the markets to increase to test resistance, but in the case of both the S&P 500 and Dow Jones industrial average, because the trendline is now downward sloping the resistance line is a lower high.  Treat support as inflection, expect increases if support holds, but be prepared for steeper midterm downward sloping channels in the S&P 500 and Dow Jones industrial average if these first downward sloping support lines break in those markets.  That could also cause a downward sloping channel in the NASDAQ of course.

MID Term Support for the DOW exists at 17530

MID Term Resistance for the DOW exists at 17657

Dow_30_day


LONG Term Analysis

Our combined longer-term analysis is offering bearish signals and if the markets end this week in the condition they are now big red flags will surface.  The dow Jones industrial average has thus far broken back below its converted longer term support line, the former resistance line in that market, and the pullbacks that happened this week suggest that both the S&P 500 and NASDAQ have both successfully tested their respective resistance lines.  Our combined longer-term analysis is currently on the verge of turning aggressively bearish given those facts, but this week is not over and not until this week ends will we know how the candles develop.

LONG Term Support for the DOW exists at 17790

LONG Term Resistance for the DOW exists at 18270

Dow_1_year