Tuesday, November 22, 2011

Daily DJIA Is Trying To Form A Base Near 11112-11344 Levels

Wall Street recap: Dow Jones drops 54 points amid lowered 3Q11 GDP
The Dow Jnes fell as much as 113 points intraday to 11434 after 3Q GDP was revised lower to of 2% (earlier: 2.5%) and the cost of insuring French, Belgian and Spanish government debt against default leapt to records as bond yields in the region climbed.

The losses were reduced to 54 points at 11494 amid signs that the Fed may provide more stimulus in the minutes of Nov. 1-2 FOMC meeting.

Sentiment also improved following statement by Moody’s and Standard & Poor’s that there were no immediate plans to downgrade the credit rating following the failure to reach agreement on reducing the U.S. budget deficit.

DJIA outlook: Crucial short term supports near 11122-11344 levels
After briefly surpassing the 200-d SMA (now at 11967) to as high as 12284 (27 Oct), the Dow Jones plunged 6.4% to end at 11494 points yesterday.

Momentum fizzled out as investors were pessimistic of the tricky Euro debts crisis management and an uncompromised plan on the US$1.2trn debt-reduction cuts, overshadowing the gradual progresses in the recent US economic numbers.

Following the break below major supports of mid Bollinger band (11927) and 100-d SMA (11650), the Dow Jones may retest lower supports at 11344 (50% FR) and 11122 (61.8%).

As slow stochastic readings are gradually turning oversold, the Dow may be able to defend our envisaged 11122-11344 supports. More solid supports are seen at 11000 and 10847 points.

Immediate resistance levels are 11967-12284 levels.

Daily DJIA Is Trying To Form A Base Near 11112-11344 Levels

Source: StockCharts.com

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