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Trend: Short and medium term side­ways. Long term up.

Strat­egy: Sell short the bounces. In April this year the Dow ran up into its 200-week mov­ing av­er­age, which typ­i­cally pro­vides re­sis­tance (it also did so in Aug 2008, to the far left of the chart). A rally into early Au­gust this year ap­pears to have pe­tered out, short of its 200-week mov­ing av­er­age. In ad­di­tion, the weekly Sto­chas­tic Os­cil­la­tor (on top) is over­bought, which is typ­i­cally a bear­ish set-up on a chart. Traders sell short on a bounce back to 10 450, on a sign of re­ver­sal down from there. In­vestors to re­duce hold­ings in over­seas stocks. Look for a drop to line 1 at 9600 in the months ahead. If the price breaks down and closes be­low line 1, it will set up fur­ther down­side to 8700, for more short­ing. Traders place your ini­tial stop-loss for short­ing as two con­sec­u­tive daily clos­ing prices above 10 800.

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