Is the Dow Jones index safe?

by Alistair Strang from Trends and Targets |

The US stock market's recent tumble disappointed our chartist, but now he has a new set of numbers to watch.

We've a reason for questioning the Dow Jones as when we last reviewed it at Easter, a good argument existed suggesting the index should climb above 28,000 points. Alas, the market managed the mid-27,000's, then fell back.

It was interesting to note the index trashed this year's immediate uptrend before enacting some surprise recovery.

Oddly, when this sort of thing happens with European markets, we always fear the worst as any future break below a trend is both expected and will doubtless be vile.

But North America is different as, when a price breaks below a trend, then recovers above, the market will invariably climb to safety again. 

Often, we feel this is the difference in national psyche - across the pond hoping for the best, but on this side we expect the worst.

If the USA continues "hoping for the best", it appears movements now exceeding 26,415 calculate with the ambition of an initial 26,637 points.

If exceeded, it will be sane to hope for continued recovery toward 27,272.

The visuals quite strongly suggest some hesitation if such a level makes an appearance. 

By taking the European standpoint, in the scenario of the Dow falling below red - presently around 26,000 points, reversal risks being quite share down to 25,289 points initially.

If broken, secondary is a longer-term 24,592 points.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and discussion, and create your own Virtual Portfolio