Thursday, October 6, 2011

Dow Jones Stays Above 10-Days SMA After Piercing Line Formation

Wall Street Outlook: US stocks surged for second day
The Dow Jones rally for a second day as US economic data topped estimates while optimism grew European leaders will recapitalize banks. The US ISM for non-manufacturing fell to 53 in September from 53.3 in Aug but was ahead of 52.8 consensus. US companies added 91k workers in September after 89k gain in Aug and ahead of 75k consensus. The positive economic data coupled with shrinking crude stockpiles suggest that fuel demand may increase. IMF said EU officials are working on plans to boost bank capital to contain the debt crisis.

Dow Jones Outlook: Above 10-d SMA
Technically, after second day of strong surge, the Dow has crossed above the 10-d SMA line at 10922. The formation of Piercing Line on Tuesday and the cross above the 10-d SMA on Wednesday suggest that the current rebound could test the mid Bollinger bank (or the 20-d SMA) at 11090. Again, for sustainability, volume needs to pick up.

Immediate resistance levels are the psychological 11k and 11,090 (mid Bollinger band) and 11568 (upper Bollinger Band) while support levels are the 10-d SMA, 10429 (38.2% FR – from low in Mar 09 to high in May 11) and 10390 (74.6% FR – from low in Jul 10 to high in May 11).

Dow Jones Daily: Above 10-Days SMA After Piercing Line Formation

Source: HLeBroking

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