Dow Jones Industrial Average- (8378): Near term Trend : Bearish (Impending corrective rally). Last week Dow lost just over 5.4% and manage to float above the panic low of 7.7k(10th Oct) despite of a rout in the global equity markets. Is it a signal of strenght? Since Oct 2007 it has lost more than 45% value & the current week is 55th week from the absolute top of 14k. Being a Fibonacci number (55) the current week could lead to a "important" reversal (at least time being) if the bulls swung back in action, preferably with a "weekly close" above 8.9k.On the Monthly chart, 200 'months' (not days) moving average (current months value 8.8k) has provided "excellent" base formation (support) in the year 1978-1982 (see monthly chart). Now in this month, first time since 1982, the Dow has once again fallen back to this "long term" support line. In short, the level around 8.8k could emerge as a significant "support" zone for the index, at least in the immediate near future.
On the weekly chart, since top, the Dow is moving in perfect falling parallel channel (see dotted line on the weekly chart) & in this month it has bounced back 3 times from the lower end of the parallel channel (for the current week value is around 7.9k). This suggests at 'halt' in the downtrend OR a temporary respite for the bulls, provided the Index managed to float above 7.7k-7.9k.There is another possibility of a "Expanding" triangle (marked in dark line on weekly chart) formation on weekly charts, with last 'e' leg has ended at 7.7k.All these observations suggests a "fair" chance of 'recovery' in Dow provided it able to move above 8.9k on a weekly closeing basis. At the same time it is equally difficult task to take call on whether this is corrective rally or a 'end of the worst". Lets see how the things unfolds in the next few weeks/months.
