Uncle Dow is falling down

The last friday closing for the Dow Jones took me by surprise. Before that, there was a hammer candlestick formed on the trendline and the 200d MA. The hammer tested both of these and it managed to close above it so technically speaking, i believe that was the bottom of the correction. However, the Dow Jones closed with a huge black candlestick and it closed below the 200d MA. The 200d MA, as i said in my previous post is an very important moving average line as it determines whether the major trend of the market is up or down. The last time, it dip below the 200d MA was in Nov 2005 and that was like 2 years ago.

The next support level for the Dow Jones should be around 13800 and that was the level which the previous correction at around 22nd of Oct had fallen to. Short-term wise, we should see a technical rebound in the next few days but bear in mind, that the market is still downtrending. It can be seen from the blue line that the Dow Jones is now forming a downtrending channel and it is right at the support level or the lower trendline that of the channel. Thus the Dow Jones should bounce off this trendline going by the chart.

RSI is showing bullish divergence. I have drawn the lowest level of which the MACD lines have fallen to in the previous correction in Aug as a gauge to judge when will this correction ends. If the MACD line touches around this level, it can act as a technical signal that the correction should be ending soon. For the MACD histogram, i have also done the same thing. If the technical indicators are conflicting each other, i will just look at the index action and volume since all technical indicators are derived from these two factors.

Dow Jones Industrial Average:


Nothing much for the Straits Times Index. Basically, it follows the Dow Jones closely. As we all know now, the Dow Jones close badly on Friday so i doubt when we open later, we will rebound back.

Currently, STI seems to be supported on the 100d EMA and it closed with a gap down. STI is also showing RSI bullish divergence. I also done the same thing for the MACD lines and histogram as i did for the Dow Jones chart. I noticed that the charts for the STI and the Dow Jones are very similar except the STI seems to be lagging by the Dow Jones.

Straits Times Index:


Meiban Gp had a breakout with relatively heavy volume. It opened with no gap down despite of the fact that STI and a whole lot of other counters opened with a gap down. What was impressive was that near the closing, a married deal of 870 lots was done and that pushes up the price. Furthermore, there was no heavy selling towards the closing. I actually think that this is a potential counter but given the current bearish market sentiment now, i will be giving it a miss. Besides, my exams is drawing near and i should be looking at my engineering notes instead of the charts :)

Meiban Gp: