Increasing by more than 600 points since early Jul 09. Wave 4 within the Dow Jones Industrial Average (INDU Index) may have ended sooner than we thought as the index continues to rebound off its low at 8,087. With the candlesticks depicting successive higher highs and higher lows which indicate that the trend is positive, we believe that the current Wave 5 could still push the index up even further.
Trading opportunities are present. The various technical indicators are also looking bullish. The MACD chart has just produced a centreline crossover while the bollinger bands have started expanding, signifying that the bullish trend has further room to go. Short-term investors are recommended to ride on this uptrend before the Dow meets with its resistance.
Resistance is outlined at the 9,155 – 9,159 range where a series of daily highs are situated. On the other hand, immediate support is located at the 8,363 – 8,392 area where the 14 and 21-day moving averages reside. South of that, stronger support at the 8,076 – 8,093 region is available to cap any further downside pressures.
S&P 500 Index: Trading outlook is similar to that of the Dow
As with the Dow, we have also revised our Wave Count for the S&P 500 (SPX Index) and we now believe that the current Wave 5 coupled with the string of higher highs and higher lows in its candlesticks should propel the S&P higher. The expanding bollinger bands and the centreline crossover within the MACD chart are similarly signaling that the underlying trend is bullish.
Key levels to note. Resistance is seen at the 1,001 – 1,007 area where a series of daily highs are situated. Meanwhile, immediate support is identified at the 905 – 910 range where a technical gap and the 14 & 21-day moving averages converge. Stronger support is also available at the 870 – 875 region as represented by the lower bollinger band and the 200-day moving average.
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