Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

DJ Transportation & Utility Averages Suggest Stocks Bull Market Is Over

Stock-Markets / Stocks Bear Market Apr 20, 2015 - 06:15 PM GMT

By: Austin_Galt

Stock-Markets

Let’s analyse the technicals of these two indexes beginning with the DJ Transports.

The Dow Jones Transportation Average is a stock market index of the American transportation sector. Price last traded at $8647.

Let’s take a bottom up approach beginning with the weekly chart.


DJT WEEKLY CHART

We can see four peaks – a quadruple top. This is bearish indeed. Generally, the fourth attempt at resistance is successful but, as Gann noted, price failing on the fourth attempt and turning down is very bearish.

The first peak, the all time high at 9310, was accompanied by a triple bearish divergence on the Relative Strength Indicator (RSI). This often leads to a  significant decline and that is my expectation here.

The Moving Average Convergence Divergence (MACD) indicator has been trending down bearishly and has subsequently made a new low. This is likely indicating a bear trend is at hand.

DJT MONTHLY CHART

The Stochastic and MACD indicators both have a bearish bias with the red line above the blue line.

The Bollinger Bands show price has moved away from the upper band and is now hovering around the middle band. The upper band looks to be curling over for the first time in over 2 years.

I believe a bear trend is now in progress however price will need to break below the previous swing low which stands at 7700 and is denoted by the upper horizontal line.

I have added Fibonacci retracement levels of the move up from the 2009 low to recent high and I am targeting the final low to be around the 61.8% level at 4875.

I have added moving averages with time periods of 100 (red) and 200 (black) and price may find support at these averages.

The lower horizontal line denotes the October 2011 low at 3951 and I doubt price will trade that low.

Let’s wrap it up by looking at the big picture yearly chart.

DJT YEARLY CHART

The Andrew’s Pitchfork show price has blown off above the upper channel. It is quite common to see this take place when price first attacks that upper channel line. It is often a false break top and price comes back down to put in a pullback low. This low may be around the middle trend line or the lower trend line.

The Bollinger Bands show price has traded well above the upper band which is a common feature found at solid tops. I’d like to see price find support at the middle band.

The RSI made a new high with the all time price high. This indicates strength and gives me confidence that once the pullback is over price should then head back up to new all time highs while this indicator shows a weaker reading – a bearish divergence.

The Stochastic indicator is showing a bearish divergence and this high and I expect a new high in the years to come to throw up another bearish divergence. This indicator looks to be threatening a bearish crossover.

I have added the same Fibonacci retracement levels from the monthly chart just to add another perspective. The 61.8% level looks to be right around the middle Bollinger Band and the lower pitchfork channel come 2016-17. Food for thought.

Also, I have drawn a green highlighted circle which denotes the area whereby price launched higher parabolic style. Price often returns to these exact levels when correcting and I favour that occurring here. This area is just above the 61.8% Fibonacci retracement level.

Summing up, the top looks in place here and a big bear trend looks to be tracing out its first baby steps.

Now let’s turn our attention to the DJ Utilities Average index.

The Dow Jones Utility Average (DJU) is a stock index that keeps track of 15 prominent utility companies. Price last traded at $583.28.

Let’s take a top down approach beginning with the yearly chart.

DJU YEARLY CHART

The Relative Strength Indicator (RSI) is showing a bearish divergence at the recent high while the Stochastic indicator is showing a triple bearish divergence. It would be no surprise to see a significant decline develop from here.

The Bollinger Bands show price recently traded above the upper band which is often found at tops. I would like to see prie come back down now and eventually bottom out around the middle band before resuming the massive uptrend.

The Parabolic Stop and Reverse (PSAR) indicator has a bullish bias with the dots underneath price. I would like to see the move down bust the dots on the downside to relieve the bullish pressure before the uptrend continues.

I have drawn an uptrend line which may provide support for price however this trend line is not unobvious so the potential exists for price to make a false break below this line before resuming upwards. Let’s see.

DJU MONTHLY CHART

The recent high showed a quadruple bearish divergence on RSI while both the Stochastic and Moving Average Convergence Divergence (MACD) indicators are both now trending down with a bearish bias. So, lower price look likely according to these indicators.

Price has recently busted the PSAR support with the dots now on the upside indicating a bearish bias.

The Bollinger Bands show price is now back to the middle band. Does price bounce back up to the upper band or break down to the lower band? I favour the latter after a bit more work around the middle band.

I favour a bear trend is now in progress and to confirm that outlook price will need to break below the previous swing low of 524.82 which is denoted by the horizontal line.

How low do I expect price to trade?

I have added Fibonacci retracement levels of the move up from 2009 low to recent high and I am targeting the 61.8% level at 429.43. The 76.4% level at 375.63 also needs to be given consideration.

Also, I have added a 200 period moving average which also may provide support.

Let’s move on to the weekly chart.

DJU WEEKLY CHART

I have drawn two horizontal lines which denote previous swing lows and we can see price has already busted below these levels so a lower low is in place. Now we just await a lower high and the downtrend will be off and away.

I have added Fibonacci retracement levels of the recent move down in order to determine where the lower high might be. The 61.8% level at 622.09 and the 76.4% level at 635.50 both loom large.

Price will need to bust PSAR resistance first with the dots above price. Until that happens the potential exists for price to drop a bit further.

The lower indicators, the RSI, Stochastic and MACD, have all made new lows recently. This is a bearish development in that a more solid price low would likely occur with bullish divergences meaning stronger readings. So, the current rally is most likely a bear rally.

Summing up, the indications are that the bull trend is through and a bear trend is in its infancy.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2015 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife