ZLBT Chats

Tuesday, April 7, 2009

Dow Jones And Some Global Indices

Performing as anticipated.
Our forecast for the Dow Jones Industrial Average (INDU Index) to register additional gains was once again in the money as the index appreciated some 3.1% last week. However, with Wave 1 having possibly fulfilled the benchmark 61.8% fibonacci retracement of its previous downtrend from 9,088 to 6,469 when the index had hit its monthly high during Apr 09, it is therefore likely that the corrective Wave 2 is forthcoming.

Preferred Wave Count
Wave 1 may have ended. Assuming Wave 1 had travelled from 6,469 to 8,075, a conservative price target for Wave 2 would be the 38.2% fibonacci retracement point. With this resulting in the 7,462
mark [ derived from 8,075 - 38.2% * (8,075 – 6,469) ] and coupled with the 50-day moving average at the 7,562 level, we therefore identify support at the 7,462 – 7,562 region.

Alternate Wave Count
Wave 1 still at play. Should the index depict a clear break above the 8,087 level, this would indicate that Wave 1 has not yet ended and that the ensuing momentum should push it to the resistance area at 8,446 - 8,470 – this level is derived from the 76.4% fibonacci retracement of 9,088 to 6,469. Nevertheless, we do not think this would occur in the short-term as the 14-day ADX is still languishing at tepid levels.

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