| Stock market updates and dow jones industrial outlook |
|
| Friday, February 24, 2006 |
|
Weekend Update
Dow Jones Industrial Average (INDU)
This update will focus on the Dow Jones Industrial Average. An interesting fact about the DIA is that it is rising on all time high short interest. Last year we had a 3 month rally on the INDU starting in May and ending in July/August 2005. During that rally, short interest was also very high. Once we topped at the end of July, we were short through to October. Short interest then once again reached new 52 week highs. Consequently, we had a reversal to the upside, and the INDU rallied all the way through the month of December. Since January, the INDU has been consolidating and trading sideways. Which leads me to conclude that we are beginning to see the same type of short covering rally repeat itself now. The higher the INDU moves up, the more bearish people become. This bearishness feeds upon itself. Retail traders are shorting without really know what they are doing. Both professionals and retail are shorting because they believe that the INDU is overpriced and that it cannot go higher. Are they ignoring the fact that higher highs are bullish? Do not short higher prices.
The monthly chart of the Dow Jones Industrial Average (INDU) shows that it is in a sideways consolidation pattern/slim jim. The INDU has held its moving averages and is consistently moving upwards. Short to medium term price target remains 11350. All time high resistance is at 11750.20. On the monthly you can see that both the PPO and Williams % are both turning up. Volume is also expanding and the RSI is not even overbought. This is the type of market that any stock would love to surge in.
The Dow Jones Utility Average (UTIL)
The monthly UTIL chart looks like nothing that I have ever seen before. It has been absolutely parabolic since reaching its lows at 162.52 at the end of 2002. It is now consolidating in a wave 3 to 4 but remains in its uptrend channel and it still has to reach wave 5.
The Dow Jones Transportation Average (TRAN)
I want to point out the following fact that there is consistent rotation between the UTIL and TRAN indexes. When one is up the other is down and vice versa. The UTIL currently looks to go up whilst the TRAN looks ready to pullback. The daily TRAN chart shows that it is currently forming a mini rising wedge and it could fall to support just above 4000.
Blue-chip Update
Citigroup, Inc. (C)
The daily Citigroup chart looks very bullish. It is in an ascending triangle pattern. It is holding it's uptrend line nicely and the moving averages are just crossing over and turning upwards. On Friday Citigroup closed up 0.11% at 46.85. In addition, the Aroon has just had a bullish cross, and all other indicators are bullish. The banking index, as previously mentioned, is very strong.
J.P. Morgan Chase & CO. (JPM)
Interestingly enough this chart looks just like the BKX. The daily chart
shows that it has broken out of a symmetrical triangle (a lot of stocks are in this pattern). Once again all indicators are bullish. On Friday, JPM closed up 1.34% at 41.66. Price target remains in the mid forties and possibly higher.
Honeywell Intl (HON)
Honeywell is a big component of the DOW and it is also very strong. It is another great stock. On the daily chart HON has broken out of it's symmetrical triangle and is currently pulling back to form a bull flag. On Friday, it closed up 0.12% at 41.48. Short term price target is around 50.00 which is it's next major resistance point.
United Technologies Inc. (UTX)
On the Daily chart UTX is just breaking out of a triple top ascending triangle. It has also just finished completing a running correction. This type of correction occurs when wave B is higher than wave 3. Today UTX made new 52 week highs at 58.89 and is now going up to wave 5.
DIA--DOW JONES INDUSTRIAL AVERAGE ETF HIT'S ALL TIME HIGH SHORT INTEREST
DOW DAILY
DOW MONTHLY
$UTIL
$TRAN
BA
C
JPM
HON
UTX
|
