The Start of Bear Market?

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DOW Jones Industrial, S&P500 and NASDAQ Composite have all broken the 200D MA support. All three indices show similar chart pattern and currently traded at about 23.6% Fibonacci Retracement Level. There will be probably a short term bullish rebound from this support level before continuing the bearish down trend. Also take note that all three indices were unable to break the 50D MA resistance and turned down.

DOW JONES INDUSTRIAL

  • Resistance: 20D MA and 200D MA
  • Support: 10,109 (23.6% Fibonacci Retracement Level) and 10,000 (psychological support)
  • Target Correction Level: 9,428 (38.2% Fibonacci Retracement Level)

SNP 500

  • Resistance: 20D MA and 200D MA
  • Support: 1,094 (23.6% Fibonacci Retracement Level)
  • Target Correction Level: 1,014 (38.2% Fibonacci Retracement Level)

NASDAQ COMPOSITE

  • Resistance: 2,322 (previous resistance in Dec 2009) and 20D MA
  • Support: 2,230 (23.6% Fibonacci Retracement Level) and 200D MA
  • Target Correction Level: 2,046 (38.2% Fibonacci Retracement Level)

 

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Review of Key Indices Patterns

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DOW JONES INDUSTRIAL

  • DJI is at the top of channel resistance. If the index cannot break this channel resistance (about 10,500), it may retrace back to 10,100 level (close to channel support) in the coming one to two weeks.

S&P500 (SPY)

  • S&P500 has a similar uptrend channel pattern as DJI. If the index cannot break this channel resistance (about 112), it may retrace back to 107 (close to channel support) level in the coming one to two weeks.
NASDAQ COMPOSITE
  • NASDAQ is hitting a critical resistance at 2191 level. It is important to see whether NASDAQ can break this resistance and continue its uptrend. 
Straits Time Index (STI)
  • STI broke the previous resistance of 2,734 and continue its uptrend in a channel. 2,800 is a key resistance level and STI may retrace back to 2,670 (channel support) if STI is unable to stay above this resistance level.
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Review of Key Indices Patterns

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DOW JONE INDUSTRIAL
 
 

  • DJI is still on the uptrend as the chart pattern shows the index is still having a higher high, lower high.
  • 10297 is a critical resistance and DJI has to break this resistance to confirm the uptrend is still intact.
  • 9916 is a critical trend support. If DJI breaks this trend support, the next critical support level to watch is 9710. If DJI cannot stay above 9710, it is confirmed that DJI up trend has ended and may start the down trend.

 

 S&P 500 (SPY)

 

  •  S&P500 appears to be forming a Double Top. Critical support is at about 105 (projected up trend support level). If SPY breaks below this trend support, SPY may be sent down to about 100 level.
  • 110.1 is the critical resistance.

 

 NASDAQ COMPOSITE

 

  •  NASDAQ appears to be forming a Head & Shoulders. If NASDAQ falls below 2041 (neckline) and stay below this level, H&S pattern is confirmed and may send NASDAQ down to 1893.

 

 Straits Times Index (STI) 
  • STI has a similar pattern to S&P500, forming a Double Top.
  • Critical uptrend support level is at about 2630. If STI breaks this support, the index may go down 2496 level.
  • Critical resistance at 2743.

Base on the chart patterns, DJI, S&P500, NASDAQ and STI probably will be bearish for the next one or two weeks. The market direction may be predicted depends on the patterns confirmation.

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