The updated weekly and daily bar charts for the Dow Jones Industrial AverageSM (INDU) provided below encompass trend, volatility, volume, and momentum information. Chart specifications for both charts are provided next and chart assessments appear below each view. In the assessments the term “alert” indicates a warning while the term “signal” indicates a bullish or bearish action for the indicator. These are not suggestive of a trade signal since the tools have not collectively been back-tested.
Chart Specifications
A bar chart provides volatility information by noting price range for the bar for the period.
Price Trends
- Simple moving averages [SMAs]
- Linear regression channel [LRC] constructed from 7/10/09 – 7/9/10, extended left & right
Volume
- On Balance Volume [OBV] cumulative indicator
Momentum
- RSI with SMA [14-period with 9-period SMA]
- MACD [12, 26, 9]
By starting with a view of the longer term chart, the analyst can assess the shorter term with the more dominant trend in mind.
Figure 1 Weekly Chart of INDU with Trend, Volume & Momentum (2/15/2008 – 1/24/2013)
Price Trend
The 20-week SMA is rising providing an objective reading for a bullish intermediate-term trend. The price bars are continuing their advance in the lower channel area of the long-term LRC. Using channel dynamics, price is expected to continue to the middle regression channel line.
Volume
Volume is confirming the advance with an OBV that is continuing upward and has risen above its previous peak.
Momentum
RSI continues higher and has worked out a potential divergence that was forming last week. It remains over the 60 level keeping in firmly in a bullish range (40-80). MACD continues to provide a warning with a divergence that has been in place since March 2012. MACD does; however, remain in a bullish set-up with the fast line above the slow line.
Overall INDU is intermediate-term bullish with an alert being given by a MACD divergence. The RSI alert has been resolved.
Figure 2 Daily Chart of INDU with Trend, Volume & Momentum (7/20/2011 – 1/24/2013)
Price Trend
The 20-week & 50-week SMAs are rising, providing objective readings for a bullish short-term and intermediate-term trend, respectively. In addition, the most bullish set-up is in place with the index rising and currently above the shorter-term SMA which is above the longer-term SMA. Price bars are continuing their advance in the lower channel area of the long-term LRC.
Volume
Volume is confirming the advance with an OBV that is moving upward, recently breaking above a long-term declining resistance line.
Momentum
RSI is in a bullish range and is approaching overbought levels near 80. MACD is bullish and strengthening.
Overall INDU is short-term bullish.
Clare White, CMT
Contributing Writer and Options Strategist
Optionetics.com ~ Your Options Education Site
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