After posting about the Dow Jones Industrial average daily and weekly trend last week, I was following the Dow Jones market very closely last week. I thought there would be some bearish sentiment developing and the market might trend lower due to the stalling of the auto bail out plan.
Finally, white house utilized the financial rescue package to give a big hand to the automakers. However, you might be wondering, how come the market did not rally up and cheer after receiving such a news. The market was almost staying flat for the last one week.
Let’s do a quick review now! And see if there would be any year end rally or not.
Still Bearish Sentiment in the Market
The helping hand to the automakers was a big good news to me, plus the Fed decision to lower the interest rate to almost zero now, this should be another 2nd good news. But, don’t you feel any surprise that the market did not react with big rally or big move. Looking the daily chart, the market was staying flat almost the whole week.
I ever heard once “Bear market ignores all good news”. Since the market did not react positively to the 2 big good news, I will suspect and hypothesize that the bearish sentiment is still hovering in the market!
Dow Jones Daily Trend
Pennant Formation on Dow Jones Daily and Weekly Chart
If looking at the daily and weekly Dow Jones chart formation, I observed that there is a pennant formation on both the daily and weekly chart. The pennant looks like an upward channel with a rally for the last 5 weeks. Plus, the volume is diminishing. This looks exactly like a pennant.
If my earlier hypothesis that the bearish sentiment is true, then this pennant will be a technical rebound. After the rebound, the overall market may continue its downtrend.
Dow Jones Weekly Trend
Would There Be A Year End Market Rally?
There are 3 more trading days to Christmas and 7 more trading days to end the year 2008. Do you think there will be a year end market rally during this festive season?
Looking at the chart formation now, I believe that the market will stay flat for the moment, at least till end of the year. I am saying that because I once heard about a term called “Index Dressing”. The market big boy or institutional trader will do their best to uphold the market indices in order to report a better or not too worse performance for the year end reporting. I do believe there is some truth in this.
These big boys may try to hold the market in these 7 days, looking at the bearish sentiment now, it will be difficult to stimulate the market to go on a bull rally. But at least I think they may try to hold it flat.
So, year end rally? My take is that it is not a big rally, but I think it will just be a sideway swing.
DISCLAIMER: This information is used for learning purposes only. It does not constitute an offer or solicitation to buy or sell. You should do your own analysis on top of my postings.
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