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

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