DJIA broke its medium-term uptrend line

DJIA dropped more than 310 points overnight on concerns about mortgage & corporate lending markets. The sharp drop has caused the index to violate its medium-term uptrend line at the 13700 level. You would notice that the index rebounded off its low of 13300, which is a strong horizontal support.

The Asian markets have been more volatile in the past few trading days, mirroring the current correction in the US & European markets. Despite greater volatility, most Asian markets (with the exception of the Japanese market) are still tracking their short-term, steep uptrend line. Today's trading could be different. The breakdown in Dow overnight could lead to similar breakdowns across the region. The Malaysian market, which has yet to breakout of its consolidation or waiting phase, may suffer less in term of drop in the main indices but the same may not apply to some stocks which had seen sharp price run-up lately.


Chart: DJIA's daily chart as at July 26 (courtesy of Yahoo Finance)