This report will examine the Dow Jones Industrial Average on a daily, weekly and monthly basis. A technical analysis for each chart will be presented with an explanation on the current status of the security. It will also provide an explanation of what price action needs to occur to maintain the prevailing analysis. Additionally, long term and short term support and resistance prices will be provided.
First a little background information on the Alpha Trend Analysis system...
This system has been in development for almost 15 years. The Alpha Trend is the primary trend line that I have created to analyze the prevailing trend of a security. It is an adaptive moving average using trigonometric functions. It is from this primary trend line that all other formulas are derived. There are six moving average trend lines that are used to analyze a security. The short-term indicators are the upper and lower bands, which are two days in length. The mid term indicator is the Alpha Trend, indicated by the bold red line, which is several weeks in length. Lastly there are three moving averages of the Alpha Trend. The one-year moving average, which is red colored. The five-year, which is bright green colored and the ten-year, which is black colored. The chart contains two windows. The top window indicates whether the current position is long, short or neutral. A long position is indicated by one (1), a short position is indicated by negative one (-1) and a neutral position by a zero (0). The bottom window contains the security's information along with the six moving averages. At the very bottom of the chart the primary trend of either bullish or bearish is indicated.
Dow Industrial Daily Chart
Primary Trend BEARISH
Open 10,546.30, High 10,553.60, Low 10,460.50, Close 10,461.30 Current Position Short -1.0 Alpha Trend 10,604.80 Upper Band 10,555.35 Lower Band 10,468.60 1yr moving average of Alpha Trend 10,348.46 5yr moving average of Alpha Trend 9,848.16 10yr moving average of Alpha Trend 8,978.99 Sell price 10,464.79
Above is the daily chart for the Dow Jones Index. Currently the primary trend of the Dow is bearish and has been since March 11 2005. On April 4 the Dow came within Dow 12.5 points of the one-year moving average of the Alpha Trend, this trend line has held since November 4 2004. On Friday April 8 the Dow rallied to within 51 Dow points of the Alpha Trend, currently at 10,604.8. The Dow appears to be trapped between the Alpha Trend and the one-year moving average of the Alpha Trend. Friday's price action would suggest that Dow should fall to at least the One Year Moving average of the Alpha Trend, currently at 10,348.46. If the Dow is unable to hold above the One Year Moving average of the Alpha Trend the next support is the Five Year Moving average of the Alpha Trend which is currently at 9848.16.
Dow Industrial Weekly Chart
Primary Trend Bearish
Open 10,401.70, High 10,557.10, Low 10,356.70, Close 10,461.30 Current Position Short -1.00 Alpha Trend 10,581.13 Upper Band 10,962.40 Lower Band 10,730.50 1yr moving average of Alpha Trend 10,303.85 5yr moving average of Alpha Trend 9,882.23 10yr moving average of Alpha Trend 8,664.85 Sell price 10,358.95
Above is a chart for the Dow on a weekly basis. The primary trend of the Dow is currently bearish and has been for the last three weeks. On April 4 the Dow fell to within 52.85 Dow points of the One Year Moving average of the Alpha Trend, and then the resulting rally came within 24 Dow points of the Alpha Trend, currently at 10,581.13. The Dow was not able to break through this resistance price area and on Friday the week's rally came to an end. Since the Dow came so close to the Alpha Trend and then retreated, this would suggest a continuation of the bearish call for the Dow. Friday's price action suggests that the Dow should pullback to the One Year Moving average of the Alpha Trend, currently at 10,303.85. The weekly chart shows that the Dow is currently trapped between the Alpha Trend resistance price, and the support of the One Year Moving average of the Alpha Trend. If the Dow cannot hold at the One Year Moving average of the Alpha Trend, the next support price is the Five Year Moving average of the Alpha Trend, currently at 9882.23.
Dow Industrial Monthly Chart
Primary Trend Bullish
Open 10,504.60, High 10,568.90, Low 10,356.70, Close 10,461.30 Current Position SHORT -1.0 Alpha Trend 10,043.45 Upper Band 10,853.40 Lower Band 10,489.60 1yr moving average of Alpha Trend 9,539.01 5yr moving average of Alpha Trend 9,877.15 10yr moving average of Alpha Trend 8,168.70 Sell price 10,364.09
Above is the monthly chart for the Dow Index. The primary trend of the Dow is bullish and has been since September 30 2003. Since the start of the year the Dow has held to within a 6% trading range, and the Dow is currently at the lower end of this range. Since the start of April, the Dow has only been able to rise 78 points over March's Lower Band support price of 10,489. The Dow is currently below this support price. Since July 31, 2003, the Dow has traded above the Alpha Trend which implies that this is a major support trend line for the Dow. Currently the Alpha Trend is at 10,043.45. April's price action suggests that Dow could fall an additional 4% to the Alpha trend line.
In conclusion, when all three charts are analyzed, some very interesting price bands are produced. From the daily and weekly Alpha Trend a price resistance range of 10,581 - 10,604 is produced. The Dow has not been able to get through this price range, and for the Dow to turn bullish, it will have to close above this range. From the daily and weekly One Year Moving averages of the Alpha Trend, a major support price range of 10,303 - 10,348 is produced. If this range is penetrated, the next support price is the Monthly Alpha Trend support price which is currently at 10,043. A major support price range for the Dow is 9848 - 9888.This support range is produced from the daily, weekly and monthly Five Year Moving averages of the Alpha trend.
For more information on the Alpha Trend please visit alphatrendanalysis.com.
Alphatrendanalysis.com conducts an analysis every day for each and every individual stock that is a component of the NASDAQ 100, S+P 100, XAU and HUI indices. This site will also analyze the following indices, Dow Jones Industrial, S+P 100, S+P 500, NASDAQ 100, XAU, HUI and NASDAQ Composite. In addition to this, it will analyze the 10yr bond, 30yr bond, Gold, Light Sweet Crude, Platinum, Silver, Swiss Franc, CRB Index and US Dollar Index Futures using the rolling front month.