Market reversal

Today, a lot of technical factors suggest that a market reversal has taken place. For the Dow Jones, it appears to pierce the February support level but it formed a hammer candlestick with a very long tail. This hammer was formed with very heavy volume and this increases the probability of it being a technical indicator showing a market reversal.

Dow Jones Industrial Average:


The Straits Times Index gap down on 2 closings ago and it opened with a gap up today. The gap down acted as a resistance technically and today's closing covered back this gap down and this is bullish. Furthermore, by candlestick theory, an morning star formation has been formed with heavy volume and this is bullish too. For the technical indicators that i have chosen, both the RSI and the A/D line are showing bullish divergence.

Straits Times Index:


Technically speaking, i am quite convinced that the market has reversed or is already reversing. Right now, i am just waiting for a higher high and a higher low. But i cannot forecast whether this will be the next bull run or just a longer term technical rebound simply because technical analysis is not a crystal ball which allows you to gaze into the future. Thus it is better to be cautious still. Personally, i don't think that the subprime issue is something that will go away easily and i believe it will still be an issue for this year so i am still expecting turmoil on the markets.