DJIA : A Short-term Downtrend (ext.OSK)

The index’s mid-term technical landscape has deteriorated further as it has already closed below the 11000-pt psychological support level for two weeks in a row. However, the current weakness has to be confirmed by a close below the 10600 intraday low in August.

The close below the 11000 level this time around carries more negative indications then the prior break which was highlighted in our previous report. Therefore, the risk of the index trading lower has now increased. The neutralized daily RSI from the 2 month consolidation leaves significant room for further retracement. But again, any weakness has to be confirmed by a break below the August intraday low of 10600, with a minor support is found at around the 10800 level, which is the lowest close this year. If so, this would bring the weekly RSI deeper into the oversold territory. However, buying may return should the 11000 mark holds up well by this Friday and resistances are expected at the recent highs of 11500 and 11700, which is also the 50% retracement level of the August plunge. Further resistances are detected the 11900-12000 area which is in between the June low and the 200-day MAV line. The break of the short-term downtrend and the 11700 resistance level should indicate a return of buying and possibly the end of a downtrend that started in July.