Before I get to this week’s edition of my analysis of the chart of the Dow Jones Industrial average ($INDU) I need to point out what I feel many might not realize, the Dow finished up for the week ending 8/10/07. That may come as a surprise for those who only remember the pain of Thursday. Even on Friday, when we finished down 31 points for the day, the Dow was within 3 minutes of having another up day to close out the week. We were still left with a high end close which is a good sign.
This week I’m taking a look at the monthly chart for the past 15 months. I see one main area to focus on. That’s the circle I labeled “A”. Within this circle I see three potential lines of support. The first line runs from the low point in May to the low point of this week which came within 16 points of each other. The second line is the 10 month moving average which has historically acted as a significant line. The third line is the rising trend line of higher lows that started 13 months back and was hit again five months ago (at the same point as the 10 month average then).
If any of these lines hold we could see another continuation in the bull market for a few more months or longer. The upside could go back up to line “B” which has capped this month’s high so far as well as four other months and happened to be in line with the closing price from June. The more optimistic near term high is line “C” which has been the point of higher highs for six of the past 15 months.
“Charting the Dow” is a weekly post for My Trader’s Journal. If you like it, check back every week for a new version.
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