Dow Breakout - Double Bottom In Place?

The Dow is the first of lead indices to confirm a 'Double Bottom' with a neckline break of 16,500. The index tagged the 20-day MA in the process. Bears will need a 'bull trap' to regain control, but they will find it much harder to sustain a move below 16,500 which will now be viewed as an accumulation zone. The 50-day MA will be tomorrow's challenge, but momentum is on its side.  The question is whether other indices can follow suit?

The S&P finished on its neckline. Any further gain will register as a breakout. As with the Dow, the 50-day MA is just above at 1,951 to offer supply.

The Nasdaq returned a respectable gain without changing the overall picture a great deal. On-Balance-Volume returned a 'buy' trigger, and the index is on the verge of a relative 'buy' trigger against the S&P.  Volume was a little disappointing, but additional gains will get the FOMO crowd involved. Real supply doesn't kick in until 4,900.

The Nasdaq 100 actually registered a breakout of its own, although it hasn't made the same strength of move as the Dow did. Today's move was accompanied by a 'buy' trigger in On-Balance-Volume.

The Russell 2000 is still playing to a 'bear trap'. It has room to run before it reaches supply which gives bulls room to play with. For this week, look for a challenge of the January swing high around 1,035.

For tomorrow, it will be about indices consolidating their breakouts and challenging 50-day MAs.  Modest losses acceptable, but important they stay around the upper regions of last week's gains.

You've now read my opinion, next read Douglas' and Jani's.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for, and Product Development Manager for I also trade on eToro and can be copied for free.


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