Wednesday, January 11, 2012

Dow Jones Up 69 Points To 12462, Near 5-Month High

Wall Street recap: Dow Jones up 69 points to 12462, near 5-month high
The Dow Jones climbed as much as 122 points intraday before ending 70 points higher at 12462 amid a decent start of 4Q11 reporting season by Alcoa, rising expectations for monetary easing in China as government data showed that the nation’s import growth declining to a two-year low in Dec 11 and a positive Fitch’s comments about Europe being on the right path toward solving its debt problems.

However, Fitch also indicated there's a "significant chance" of a downgrade for Italy. The ratings agency plans to make a decision on all the European countries it currently has on negative watch by the end of the month.

DJIA Outlook: Uptrend still intact
Year-To-Date, the Dow Jones jumped 2% and the early "January effect" inspired hopes that US markets were beginning to overcome headline risk from the European debt crisis and moving toward a more independent track.

The Dow Jones tumbled 8.6% from October 11’s high at 12284 to November 11 low of 11231, driven by the persistent deadlock in Euro debts crisis management and an uncompromised plan and fears of potential en-mass bonds rating downgrades by credit rating agencies, overshadowing the gradual progresses in the recent US economic data. However, the index rebounded 11% from the bottom in November 11 to end at 12462 overnight.

Despite the massive rally, overall market is not excessively overbought as RSI still hovers below 70. Following the positive ascending triangle breakout, current uptrend remains intact as long as the Dow is able to maintain its posture above 10-d SMA (now at 12339) and uptrend line supports.

Immediate resistance targets are upper Bollinger band near 12600 and July 11 high of 12753.

Daily DJIA: Upside Bias Unless The 10-Days SMA And Uptrend Line Supports Violated


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