Tuesday, January 4, 2011

Dow Jones To Stays At Crucial Support At Middle Bollinger Band To Sustain Further Upside, 04-01-2011

Wall Street kicked off 2011 with a bang, Dow Jones soars 0.8% amid positive economic data, the Dow climbing +93 points to a fresh two-year high at 11671, as strong reports on manufacturing (expanded for a 17th straight month and the fast pace in seven months) and construction spending stoked optimism about the economy.

The December 10’s ISM index edged up to 57 (consensus: 57), up from 56.6 in November whilst the November 10’s construction spending data rose 0.4% (consensus: +0.2%), following a 0.7% rise in October. Economists were looking for an increase of 0.2%.

Despite the overbought position, the Dow Jones continues to scale new heights, driven by the strengthening economic data, which has postponed the long overdue profit-taking consolidation.

Having said, we reiterate our view that the Dow will continue to witness more volatility ahead should the key Dec 2010 jobs report (due January 7) and the forthcoming 4Q2010 reporting season (in two weeks time) fail to meet market expectations.

The immediate resistance level is at 11870 (upper weekly Bollinger band) whilst support levels are 11495 (middle Bollinger band) and 11318 (50-d SMA).

Daily Dow Jones to stays at crucial support at middle bollinger band to sustain further upside.

Source: StocksChart

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