DJIA broke its medium-term uptrend line

DJIA dropped 34 points to close at 13266 yesterday. The day's low was 13080- a loss of 220 points from yesterday's close of 13300. Yesterday's market action will appear on the chart as an inverted hammer, a potentially bullish sign.

Nevertheless, the worst might still be ahead. The last 2 days' trading shows that DJIA has broken marginally below its medium-term uptrend line support of 13400. A quick recovery is very important, but this did not happen yesterday.

The MACD indicator has gone into the negative territory (denoted as 'Z'). In the past 2 instances when this has happened (denoted as 'X' & 'Y'), the index took a sharp dive before recovering. If the same were to recur, the index could test the 13000 level. The index's horizontal supports are at 13300 (S1), the psychological 13000 and 12800 (S2), while its horizontal resistance levels are at 13700 (R1), the psychological 14000 and 14200 (R2).



Chart: DJIA's daily chart as at November 8 (courtesy of Yahoo Finance)