The Dow Jones Technical Analysis - A Specialist in Technical Analysis

For Sep, 02 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 Monday tells us to expect the market to begin the day with a bias to increase and it tells us to treat initial resistance as inflection.  According to the midterm charts the market is in a state of limbo, at least the S&P 500 and Dow Jones industrial average are, and former levels of upward sloping support have been converted into resistance and those are acting as a barrier to higher levels.  Also, neutral support, 1991 in the S&P 500 for example, is acting as a floor.  According to our combined analysis the market would either need to break below the floor or above the ceiling in order for more aggressive moves to come, and unless that happens we should expect the market to be stuck in a state of limbo, directionless.  A break below 1991 in the S&P 500 could lead to momentum driven declines and define a double top in the markets.  However, if the markets remain above that level and break above the converted upward sloping resistance lines in the midterm patterns of the Dow Jones industrial average and S&P 500 a progression to upward sloping resistance lines in the Dow Jones industrial average and S&P 500 should be expected instead.  The market could increase temporarily this week and then reverse and still confirm a double top, so as this is reviewed please make sure that we recognize that is how the market ends the week that is most important to longer term technicals and the probability of a double top.

Initial intraday trading parameters for the DOW exist between17035 - 17200
If 17035 breaks lower expect 16620
If17200breaks higher expect 17760
Otherwise expect17035 - 17200 to hold

If 17035 remains in tact as initial support, expect the market to increase to 17200. This reflects a tight near term down channel. However, and in line with our combined analysis, if 17035 breaks lower instead expect the market to decline to 16620 before it stabilizes again.


NEAR Term Analysis

Our combined near-term analysis tells us that the market is in a near-term upward sloping trading channel and the market is in the process of heading higher towards resistance according to our combined near-term analysis (it is very close).  We should expect the market to trend higher initially as it opens on Monday, but thereafter we should expect a test of resistance and we should treat resistance as inflection.  If the market falls back it is likely to test a higher low in accordance with the upward sloping near-term channels, but if the markets break out beyond near-term upward sloping resistance lines much steeper near-term upward sloping channels are likely to follow.

NEAR Term Support for the DOW exists at 17050

NEAR Term Resistance for the DOW exists at 17216

Dow_5_day


MID Term Analysis

Our combined midterm analysis can be summed up nicely using the midterm patterns of the Dow Jones industrial average and the S&P 500.  These markets have broken below the upward sloping support lines that were previously in place, and those upward sloping support lines are now acting as converted resistance lines.  However, these markets have not reversed lower enough to break former neutral resistance lines, which were converted into neutral support.  This creates a triangle pattern between neutral support and upward sloping resistance in the midterm chart patterns of the Dow Jones industrial average and S&P 500.  In order for the market to move it will need to either break below neutral support, which would lead to momentum driven declines, or break above the converted resistance lines, which would cause new upward sloping channels to form most likely.  Until one or the other happens our combined midterm analysis tells us that the market is in limbo.

MID Term Support for the DOW exists at 17024

MID Term Resistance for the DOW exists at 17180

Dow_30_day


LONG Term Analysis

Our combined longer-term analysis is not bearish, but if the markets turn down from these levels double tops will be established.  That means, if the markets end this coming week lower it could mark a double top and momentum declines can follow.  Last week I outlined how serious that could be, so please review the newsletter I wrote on August 29, Sunday, and use that summary for this week as well.  Depending on how this week ends, our longer term chart patterns could become quite bearish, otherwise it is status quo pointing to the upward resistance lines.

LONG Term Support for the DOW exists at 16630

LONG Term Resistance for the DOW exists at 17760

Dow_1_year