Daily Dow Jones Shows Risks of More Profit Taking Consolidations Intensify, 03-01-2011

The Dow Jones ended flat last Friday at 11,578, to close 11% for the year 2010 following stimulus measures from the Federal Reserve and the government which translated into signs of economic improvement.

In the absence of economic news and corporate announcements, Wall Street was relatively quiet during the entire holiday week, as many investors had already closed their books out in previous trading sessions.

Crude oil, meanwhile, rebounded from early losses and rose $1.54 to $91.38. Gold rose $15.50 to $1,421.40.

We see more near-term profit taking in the US equities, which we believe have been overbought. Also, the reporting season for 4Q2010 kicks off on two weeks’ time. Moreover, a repeat of last month's disappointing U.S. jobs number could spark a sell-off. Key economic reports slated for this week are December ISM (Jan 3); November factory orders (January 4); December ADP employment & December Ism non-manufacturing (January 5); December Job data (January 7).

Immediate resistance levels are 11643 (upper daily Bollinger Band) and 11870 (upper weekly Bollinger band) whilst support levels are 11480 (middle Bollinger band) and 11307 (50-d SMA) points.

Daily Dow Jones: Risks of more profit taking consolidations intensify

Source: Stockschart