Correction?

DJ Resistance : 16.588     All-time high
                            16.577     All-time high close
                            16.520
                            16.200     Important
                            16.155     50 days moving average
                            15.943     Monday's high

DJ Support      :  15.783     Monday's low
                            15.700     Strong (approx. Aug.,Sep., Oct. peaks)
                            15.405     200 days moving average
                            14.760     Strong (support old range 14.760 - 15721)

Technical Analysis :
The break down through support DJ16.174 and 50 days moving averages have caused significant technical damage to the Dow Jones Industrial Average and the bias shows the lower direction. The DJ needs to overcome DJ16.200, the 50 days moving average and stays over them to neutralize made damages.
In the short term, the DJ has formed a triangle rectangle with an upside bias.

The DJ is supported at DJ15.700 (approximately August, September and October peaks). This area should be a strong support as it was a strong resistance in 2013. It took seven months to penetrate, retest and perform new highs.

It is time to be cold during this battle. If this level supports, we are going to see a consolidation, if not, correction. Right now it is very easy to be wrong because if market supports and goes up, it could be a trap to sell at higher prices. DJ15.700 is the line in the sand, over is positive, below negative. It seems the bull market is not over.

Please click over the charts to enlarge them.

Fundamentals:

The market has corrected and what we have to determine is if the correction will continue. The frontier is DJ15.700.

The Dow Jones Industrial Average has increased 28% in 2013 without a correction of 10% at least. The last one was in 2011.

Is the DJ tired? No, a lot of investors are frustrated because they are out waiting for a new opportunity to jump into the market at lower prices. They need a correction for that.

In the fundamental, the main culprit in this decline and possible continuous correction are the concerns over U.S.A. corporate earnings, several major economies are slowing like China last week PMI Flash Manufacturing Index at 49.6, the weakness in the emerging countries as the devaluation of the Peso in Argentina and the Lira in Turkey.

In general the U.S. is doing well. We have to see the January unemployment figures. The market is expecting 2.8% PBI fourth trimester growth against 4.1% third trimester. My concern is about consumption, last week Consumer Sentiment and today's Consumer Confidence  improved in January but Best Buy, Target, etc. are closing stores and laying off staff. I still see growth in 2014 and 2015 for the U.S.A. economy as well as European, China, Japan and emerging countries' economies.

Dear traders and investors, the FED tomorrow will show us its tapering policy driven by Ms. Yellen. Normally January brings gains for the stock market, February and March loose. Let's see how January ends.

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

Consolidation

DJ Resistance :   16.588      All-time high
                              16.577      All-time high close
                              16.520      Very important

DJ Support      :   16.316       Tuesday's low
                             16.245
                             16.174       Strong (November peak and broke up)
                             15.700      Very strong (approx. Aug.,Sep.,Oct. peaks)

Technical Analysis :
As you may have noticed, the resistance DJ16.520 is strong and important for the bulls. This resistance has received four attacks in the last ten days and is still in place. The Dow Jones Industrial Average has formed a small range DJ16.174 - 16.520. In general, the market is in a consolidation but the bulls can't lose momentum because they risk to allow a correction after the earnings season.
DJ16.174 is the real battlefield between the bears and bulls.
You can see in the daily chart that the trend continues to the upside although the DJ did not get the all-time high again and could not overcome the resistance at DJ16.520. The daily chart is not toppish at this moment.
Trade respecting the supports and resistances and you will navigate in the market like a mature trader avoiding emotional decisions.

Please click over the chart to enlarge it.

Fundamentals :
The market is receiving a mixed picture from the earnings season, we still have ten or fifteen decisive days more before us. On the other hand, we got good economic news last week as Consumer Sentiment stays high, Industrial Production builts momentum and positive Housing Starts.
We are facing some contradictory results such as positive American Express which is good for consumers and the negative UPS expectations for the rest of the year.
Bulls need better earning news this and next week.
My positive factors for 2014 are two :
- Corporations are in good shape. They have cut costs, reorganized their structures and rationalized their businesses to keep good margins in the low growth environment which has been characterized in recent years.
- Corporations have plenty of cash waiting for the turn in the economy to invest in their expansions, increasing their businesses and incomes.
My concern is still in the consumption, the last weak news about opens positive expectations but we have to really see them.
FMI: Christine Lagarde "Optimism is in the air, the stage of ice has fallen behind". She expects seven years of fat cows from 2014 in her speech  to the National Press Association in Washington. She is actually optimistic although she acknowledges the risks that can affect the global economy.

Trend is still positive, we are in consolidation not in a correction, use the charts to navigate like an instrument flight where it does not matter if it is day or night.

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

Correction or consolidation?

DJ Resistance : 16.588       All-time high
                            16.577       All-time high close
                            16.520       Important
                            16.370       Strong (gap filled and prior support)

DJ Support      :  16.257.94  Monday's close
                             16.174      Strong (November peak)
                             16.058
                             15.700      (approx. August, September, October peaks)

Technical Analysis :
The strong support at DJ16.174 is intact and reinforced with 50 Days moving average. The first support broken yesterday and today's resistance DJ16.370 is very important for the uptrend. The equivalent in the S&P is 1.824 and it closed at SP1.838. This reversal should be considered a bullish sign. The volume of the market is increasing as you can see in the daily chart.

We have to pay attention if sellers come and break down DJ16.370, because the possibility to see DJ16.174 increases and there should be a real battle-field to confirm or change the trend in the short term.

The market uptrend is still in place, the trend did not change.

Please click over the chart to enlarge it.

Fundamentals :
There are good and promising economic news but there are too important factors to solve as the debt ceiling to be sure that the stock market will continue its rising. For example the energy is a promising area for U.S.A., it is going to affect the commercial balance of the country in a positive way. The rising rates are not going to slow down the economy because the economy and the corporate profits in this moment  seem to be ready to construct another year with excellent earnings. Besides if banks begin to lend money to medium and small business we are going to see more profits which is good for the stock market and the economy.
Employment, last friday we got contradictory figures between unemployment rate and non-farm payrol in addition to ADC new jobs (about 240.000).

Dear traders and investors, in summary, I think the earnings season will act as a catalyst to look for the all-time high and quite  possibly we will get a new one. We are at the beginning of the earnings season. My conclusion is that we are in a consolidation phase not in a correction. Stay long over DJ16.174.

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

November peak worked excellent as support

DJ Resistance :  16.588     All-time high
                             16.577     All-time high close
                             16.520

DJ Support       :  16.370     Breakout with small gap
                             16.174     November peak
                             16.058
                             15.700    (Approx. August, September, October peaks)

Technical Analysis :
The Dow Jones Index Average has supported very well at (approx.) DJ16.370. The S&P and NASDAQ have done the same at their equivalent levels.

If DJ stays over resistance DJ16.520, it should attack its all-time high.

The "V Reversal" exactly target is DJ16.662,. I have indicated DJ16.600 on December 11th. and November 26th. as possible goal. We can accept the target reached at this time.

The DJ is in a bullish perspective technically speaking, you can name also "positive construction". That means that the trend is up supported by the clear formation in the charts (daily and hourly). We analyse, we do not predict in the technical analyses. This is rational.  We have to pay attention at its November peak DJ16.174 reaffirmed by its 50 day moving average(DJ16.200) that works as important support (see chart). Below it we should consider a possibly correction with a strong support in the area DJ15.700 - 15.800.

The market is improuving its volume (see chart) as senior traders and investors are coming back to work.

Please click over the chart to enlarge it.

Fundamentals :
The market has positive expectations about 2014 based on encouraging economic news, healthy corporations and banks, besides  more than 10% increase on the home prices, etc. I still have my reserves about the consumption. It does not go along with the good economic news, yet there is some weakness.
We have to take into accout the weak european recovery and the stabilisation of China.
I consider that U.S.A. is going in the correct way. I remember when Germany was the world locomotive at the end of the eighties and the two first years of the nineties. We will see.

Dear traders and investors, my position is to stay long over DJ16.370 in the short term and over DJ15.700 to continue long for the medium term as indicated on december 17th.
I try to assist you in the rational navigation in these markets. No emotional decisions

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

DJ closed 2013 at 16.577

DJ Resistance :    16.577 All-time high close
                               16.520

DJ Support       :    16.370
                               16.174
                               16.058

Dear Traders and investors,
We are in 2014 and I wish you all the best for this new year.

Not too much to comment this short week.

The Dow Jones Index Average with the Christmas rally almost got its technical goal, approximately DJ16.600, from "V Reversal" (October low) as I indicated on the December 11th update.

The Dow Jones is in new territory with a bullish perspective.

The question that all we do is what we expect for the market in 2014. We are working on it. I suggest to read Nouriel Roubini in "Slow Growth and Short Tails" . The market will improve from next week with the senior traders and investors return. We are seeing low volume these days.

I enclose the yearly chart to navigate during these days. Please click over the chart to enlarge it.

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises