I charted the DJIA (previously $INDU) again today. I was actually surprised to see the chart show it looks like we have some bullish room to run still. The latest trading channel shows the DJIA is near its trend line of higher lows. 12,000 is the big question mark for this chart. It was a floor for the Dow in the first quarter of this year and then was a speed bump on the way down in June. Now we get to see if it will stop the current upswing. As luck would have it, the trading channel I mentioned at first shows that the trend line of higher highs could coincide with 12,000 and give it a double reason to take a break. The question will be if the trading channel holds the power to get through of if 12,000 is too tough to pass.
You can see a change in the DJIA’s price action once it crossed the two month trend line of lower highs. Once it passed that line (circled twice in July) it gapped up and then fell back to test that same line as a low floor instead of a high ceiling. That intersection was the second spot that started to make the up trending line of higher lows were coming close to again.
The 10,20 and 50 day moving averages are all below the Dow’s current price too. That’s another strong bullish sign, especially when you see that on Friday the 10 and 50 day moving averages are hitting a bullish cross over. That exact spot acted as a floor for the Dow keeping it moving up.
The only bullish indicator I’d really like to see that’s missing is better volume. We haven’t see a positive day with volume above the average since July 23rd. I expect to see some volume after the 12,000 level question is answered.
