Levels to Watch on the Dow Jones Nov 3

Nov 3, 2009: 2:51 PM CST

Following up my post this morning on the “Broken Support on the S&P 500,” let’s take a similar look at the current levels to watch in the Dow Jones Average.

Speaking from a daily exponential moving average point of view, we see that the Dow Jones actually remains above its daily 50 EMA – which now rests at 9,670.  The Dow Jones is currently the last of the major four US Market Indexes to hold above the 50 day EMA.  The Russell 2000 has fallen (broken) the most beneath its rising average.

Any break beneath that zone will likely be met with further selling in a deterioration of the uptrend bias.

The lower daily Bollinger Band rests at 9,665, giving us a confluence zone to watch at the 9,660 level for a possible support bounce… or an early reversal signal on a failure beneath this level.

To the upside, we have the 20 EMA at 9,850.  This could hold as resistance, or if broken, would clue us in that odds then favored for a retest if not exceeding of the 1,0100 October high.

Underneath these levels, we see a lengthy negative momentum divergence which appears on all four US Market Indexes.

More importantly, we see a deterioration (non-confirmation) of Breadth, or in the difference between the daily NYSE Advancers and Decliners.  For deeper explanation of that concept and bearish, non-confirmation, see my prior post “Daily Market Internals Now Failing to Confirm Market Rally”.

Again, we have volatility ahead of us thanks to a Wednesday Fed Meeting announcement and a Friday morning Jobs Report.

Stay on your toes and don’t get complacent in either direction this week.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

14 Comments

14 Responses to “Levels to Watch on the Dow Jones Nov 3”

  1. Dominick Says:

    Hello Corey. This question is more in reference to your prior post on the Hewson video. Initally my chart did not pick up the trendline break until I set the chart to logarithmic. Then it was clear. So my question is what setting (log vs. linear) do you use and is one better than the other for trading/technical analysis? I like to be on the same page as everyone else.

  2. Dan de Man Says:

    Sorry to get off topic Corey but we have bullish touch on oil on the 3 10. And it's broken out of the bullish falling wedge!

    All the best,
    Dan

  3. Corey Rosenbloom, CMT Says:

    Hey Dominick!

    A great question but not an easy one to answer.

    The best answer is to use both, as both can give signals.

    On a log chart, rising (up) trendlines will break SOONER than on arithmetic charts and falling (down) trendlines will break LATER than on arithmetic charts because of the way price compresses at the lower levels.

    It won't make a difference on shorter scales, but the log differential increases the longer you look back and – more importantly – how much price changes during that time.

  4. Corey Rosenbloom, CMT Says:

    Oil continues to surprise – it was in a range for the last few months and then – like gold – it broke out of its consolidation pattern (gold broke above a triangle) and now we're having the potential range expansion moves to the upside. These are bullish as long as prices remain above the breakout levels.

  5. Dan de Man Says:

    Wow that was a pretty wild last half an hour. It's going to be an exciting close!

  6. Corey Rosenbloom, CMT Says:

    Wow – definitely.

    I'm not trading that until we settle down. Reminds me why Fed announcements are only for those who love and embrace risk. Look at the 1-min chart of the SPY or other index – wow.

  7. Dan de Man Says:

    Yah, thats pretty wild all right. Golden rule learned a long time a go, don't trade against the feds. But if all gos well we will close above the 10 day ema.

  8. Dan de Man Says:

    Sorry to get off topic Corey but we have bullish touch on oil on the 3 10. And it's broken out of the bullish falling wedge!

    All the best,
    Dan

  9. Corey Rosenbloom, CMT Says:

    Hey Dominick!

    A great question but not an easy one to answer.

    The best answer is to use both, as both can give signals.

    On a log chart, rising (up) trendlines will break SOONER than on arithmetic charts and falling (down) trendlines will break LATER than on arithmetic charts because of the way price compresses at the lower levels.

    It won't make a difference on shorter scales, but the log differential increases the longer you look back and – more importantly – how much price changes during that time.

  10. Corey Rosenbloom, CMT Says:

    Oil continues to surprise – it was in a range for the last few months and then – like gold – it broke out of its consolidation pattern (gold broke above a triangle) and now we're having the potential range expansion moves to the upside. These are bullish as long as prices remain above the breakout levels.

  11. Dan de Man Says:

    Wow that was a pretty wild last half an hour. It's going to be an exciting close!

  12. Corey Rosenbloom, CMT Says:

    Wow – definitely.

    I'm not trading that until we settle down. Reminds me why Fed announcements are only for those who love and embrace risk. Look at the 1-min chart of the SPY or other index – wow.

  13. Dan de Man Says:

    Yah, thats pretty wild all right. Golden rule learned a long time a go, don't trade against the feds. But if all gos well we will close above the 10 day ema.

  14. ????????????? Forex ??????????? ??? Bollingerband ??? Stochastic | ????????????? Forex Says:

    […] Levels to Watch on the Dow Jones Nov 3 | Afraid to Trade.com Blog […]