Archive for March, 2010

The Dow Jones Industrial Average Approaching Key Trend Line Resistance

Posted in Dow Jones Industrial Average (DJI) on March 15th, 2010 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

With equity prices pressing higher, it appears that the Dow Jones Industrial Average (DJIA) is quickly approaching a test of the “backside” of former trend line support (now resistance) at the 10,770 level. In the absence of an overbought condition on weekly charts, there appears to be a reasonable chance that a “break” above resistance will occur.

If it does, the next focus of attention would be for an extension up to, possibly, key “cross” trend line resistance now located near 12,200 (but rises over time). This, of course, would compliment the S&P 500 Index, which is also edging toward key “channel top” resistance on its weekly chart.

Still, key trend line resistance on the Dow Jones Industrial Average is closer, relatively, than “channel top” resistance is to the S&P 500 Index. As a result, if the DJIA does break higher, it would then become the leader in the overall advance higher. If it does not, it would also become a telling “non-event” to equity bulls. The current technical set-up, however, does favor a “break” to the upside.


S&P 500 Index Breaks Above Resistance; Aimed at “Channel Top”

Posted in The S&P 500 Index (SPX) on March 7th, 2010 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

Despite overbought conditions that were clearly in place a week ago, the S&P 500 Index (SPX) broke solidly above two (2) forms of trend line resistance at the 1,113 level. This caught many investors and observers (like us) offside, particularly heading into the release of last Friday’s monthly employment data. As a result, the S&P 500 Index now appears to be headed for a test of key “channel top” resistance currently located in the area of 1,185 (and rises over time).

February’s better-than-expected employment report, last week’s announcement of fewer initial jobless claims, a 4.1% jump in same store sales at the chain-store level, a 5.9% rise in GDP, a preliminary estimate of a rise in the Reuters/University of Michigan preliminary index of consumer sentiment for March to 73.8 from 73.6 a month earlier, and a modest 0.2% increase in inventories teamed up to frame a set of economic improvements that were clearly stock-market friendly.

Further, expectations for a series of solid job gains over the next few months are likely to add some froth to the current enthusiasm for equities. The strength and extent of the current bullish momentum, however, will likely be measured as the S&P 500 Index (SPX) approaches key “channel top” resistance in future sessions.