DJIA >>> Is It A Rally Or Just Short Coverings?

A true rally or just short covering? The Dow is rallying because of an expectation of a bailout/stimulus package being presented on Monday, the 9th.

As prices rally into the resistance of what has been a formidable Wave, it’s likely this is a classic “buy the rumor, sell the news” scenario and traders should take profits on this move, not initiate a long position.

Point & Figure Chart: A type of chart consisting of columns of X's (showing price rises) and O's (showing price falls) arranged on a square grid. When the index increases, a rising column of black X's is created – a rally. When the index falls, a descending column of red O's appears – a decline. Read article on Point & Figure Charts.

Point and Figure Buy Signal: P&F Buy and Sell signals are very simple patterns that should be confirmed before placing a trade. The P&F Buy signal is used when calculating the various Bullish Percent indices. When the last signal on the chart was a buy signal, that is, the last breakout was a column of Xs going higher than the previous column of Xs and no sell signal (no column of Os breaking below the previous column of Os) has happened since the buy signal.

Point and Figure Sell Signal: P&F Buy and Sell signals are very simple patterns that should be confirmed before placing a trade. The P&F Buy signal is used when calculating the various Bullish Percent indices. When the last signal on the chart was a sell signal, that is, the last breakout was a column of Os going lower than the previous column of Os and no buy signal (no column of Xs breaking above the previous column of Xs) has happened since the sell signal.

Point and Figure Price Objective: The price that a stock should reach based on recent P&F chart signals. Price Objective is a simple calculations based on standard Point & Figure chart patterns. They are of questionable value but we include them on our charts because they have been used for such a long time. No TA users can makes no claim about their accuracy or usefulness whatsoever. For more on how they are calculated, refer Point and Figure Price Objectives.

What Does Kagi Chart Mean? A type of chart developed by the Japanese in the 1870s that uses a series of vertical lines to illustrate general levels of supply and demand for certain assets. Thick lines are drawn when the price of the underlying asset breaks above the previous high price and is interpreted as an increase in demand for the asset. Thin lines are used to represent increased supply when the price falls below the previous low.

An entry signal is triggered when the vertical line changes from thin to thick and is not reversed until the thick line changes back to thin. One important note about these charts is that they are independent of time and only change direction once a predefined reversal amount is reached.