ZLBT Chats

Thursday, April 9, 2009

Dow Worries >>> Repeated failure to breach 8,000 could signify reversal

After breaking above its 8,000 resistance last Friday, the Dow worriedly dipped below this very resistance. Now, the 8,000 has become a formidable resistance for the Dow. Repeated failures of the Dow to break through this very resistance could spell trouble ahead.

Dow Jones : Unconvincing performance last night
The Dow’s 47.5 point gain was unconvincing last night. After two negative sessions, the Dow was expected to rebound strongly last night. A volatile and shaky performance full of intra-day swings between negative and positive territory is not what we would call a strong positive performance. There is obviously weaknesses and uncertainty in the Dow now.

8,000 resistance strengthened by mid term MAV line
With the 8,000 resistance now strengthened by the green MAV line, the Dow bulls might have problems breaking above this very resistance. If the Dow fails to break this very resistance within these 1-2 weeks, it would wreak technical damage to the Dow’s charts.

We are watching the 7,437 mini support of the Dow closely. Failure for the Dow to breach the 8,000 resistance coupled with a breakdown of the 7,437 support could mean a bearish reversal of the Dow which would adversely affect the KLCI’s technical status.
Strategy : Maintain positive view of KLCI, but monitoring Dow’s 8,000 closely
Though we are concerned about the Dow, we maintain our positive view of the both the Dow Jones and the KLCI until we see the Dow break below the 7,437 mini support.

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