We saw last week that Dow Jones Industrial Average fell to new low and I was predicting that DJ will touch the 2002 low at 7,100. However, it did not touch exactly on 2002 low but it rebounded with a weekly gain to cheer for the Thanksgiving.
S&P and Nasdaq also have similar stock market trends. Where to you think the US stock market will head to next?
Let’s take a closer look at Dow Jones, S&P500 and Nasdaq now!
Dow Jones Resisted by 20d MA
After the strong rebound for a straight 5 days, Dow Jones is now trading near the 20d MA resistance at 8,600. This again become a critical level to watch because break above this resistance will send Dow Jones to retest the 50d MA resistance. Failure to break up this resistance will form another lower high, couple with the recent lower low, this is another new beginning of a down trend.
Another key observation is the volume is going down while the price is going up. That’s a bearish divergency and I think the stock will definitely pull back again on Monday.
Dow Jones Industrial Average Nov Stock Market Trends
S&P500 Also Resisted by 20d MA
Dow Jones big brother lead the way for the US stock market rebound. S&P500 also followed. S&P500 touched the 2002 low and also had a weekly gain. Similar to Dow Jones, It is now meeting a challenge of 20d MA resistance and 2nd level resistance of 50d MA as well.
Bearish volume divergence also observed on S&P500.
S&P 500 Nov Stock Market Trends
Same Pattern on Nasdaq Resisted by 20d MA
It is not surprising that Dow Jones and S&P500 also move togethre hand in hand. Nasdaq sometimes do not follow Dow Jones or S&P500 so closely. However, we observed that Nasdaq is also having similar pattern as Dow Jones and S&P500. It is now resisted by the 20d MA and bearish volume divergence as well.
Nasdaq Nov Stock Market Trends
Conclusion : Correction or Retracement is Inevitable
Looking at the stock market trends of Dow Jones, S&P500 and Nasdaq, a correction or a retracement is inevitable. I am coming to this conlusion as all 3 indices are resisted with 20d MA. Though 20d MA is not hte stronger resistance compared to 50d or 100d or 200d. However, a bearish volume divergency also showed that the upward momemtum is depleting. Without the fuel (Volume), it would be difficult for the US markets to climb to new high.
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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