Monday, October 11, 2010

Dow Jones Industrial Average Review, 11/10/2010

The Dow Jones ended 58 points higher to 11006, closing above the 11k key level for the first time in the the passed five months and recorded its fifth weekly gain of 1.6% over the last six weeks.

The buying frenzy came after a sharp drop of 95k (consensus: -8k) in the overall jobs figures in September boosted the chances of the Fed stepping in (on Nov 3 FOMC
meeting) with QE2.

Wall Street this week may pay more heed to corporate results as heavy weights like Intel (Tue), J.P. Morgan (Wed), Google (Thu) and GE (Fri) are scheduled to announce their 3Q results. Besides, expectations of more quantitative easing could keep the U.S. dollar on a downtrend, which in turn signals more gains for Dow Jones. An inverse correlation between the greenback and U.S. stocks has prevailed in the last 12 months.

Supported by improving weekly technical indicators, Wall Street near term outlook turns brighter as the Dow Jones is likely to retest the 52-week high of 11308 and weekly upper channel of 12000-12500 in anticipation of more stimulus packages by
Fed. Immediate support levels are 10500-10600.

The 5-Year weekly Dow Jones chart shows it is consolidating above the UTL (upper trend line).
DowJones08-10-2010a
Source: MarketWatch

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