Sunday, January 25, 2009

Short technical Analysis

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Last week my technical analysis (see "Dow Jones Industrials" post on January 18, 2009) was positive, yet, it looks like the stock market stuck on the same level for a week mowing around support highlighted in my previous report. Now, taking a look at the same technical indicators I see that all of them on all main indexes (S&P 500, DJI and Nasdaq 100) are still bullish with exception of McClellan Oscillator which is on its way down indicating a possibility of slide.

DJI chart

I still consider January 15, 2009 low level (drawn in my last post) as a possible support level and this sis mainly because of high trading volume in this period. Yes, over the past week the indexes dropped lightly below this level, however not deep enough to consider that there still a lot of panic sellers who may push market lower.

There is sill one factor that makes me worried. If starting from November 2008 the volatility was going down, see ATR%(7) on yearly (1 bar = 1 day) chart and in the beginning of January 2009 volatility dropped almost to 2008 summer levels, then starting from January 12, 2009 we may see an increase in volatility. For me it means that if a month ago I started to spend less time in front of chart and step by step switch to last year summer's indicators setting then now I have to be again on the alert and monitor charts daily during the trading hours. It looks like it could be too early to relax.

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