CHARTING STOCKS: Stocks' Brief Transport Of Joy
19 Dec 14:11
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--The stock market had a good shot at a considerable
corrective rally early Thursday afternoon. But the potential rally was
evidently blown away by the firming threat of war.
The Dow Jones Industrial Average is now trading about 70.00 points lower on
the day, around 8376.00.
It's notable that the DJIA's early prospects for a rally were seconded by
remarkably firmer trading of the Dow Jones Transportation Average. Even now,
DJTA is down by only 3.50 points, roughly, to about 2302.
And that in itself is a good technical yarn.
The so-called "Dow theory" of technical analysis, the brain child of Charles
Dow, a founder of the company that brings you this column, says that an
important move of the general market has to be confirmed by all the averages,
Industrial, Transportation, and Utility. Non-confirmation means that stock move
is suspect.
In this case, the DJIA is clearly bearish in the long-term. The overall
bearish character of the market suggests that the divergence between DJIA and
the higher DJTA earlier in the session was a signal of an imminent stock market
rally.
In any case, a rally will mean little for the bulls unless DJIA moves
decisively above 8580.82. That development would be an important upside
breakout, but it's unlikely in my opinion. DJIA fell through 8386.25
bounce-point support as war talk heated up this afternoon. Now that the support
has been taken out, the index is clearly showing technical weakness. For now
the average is pointed into the lower 7800 handle by early next year.
Finally, the transportation stocks have joined the blue-chip rout. It's
intraday high, 2336.37, effectively represents a test of downtrend line
resistance 2360.57 resistance.
The averages are back in synch - on the downside.
To read the Charting Markets technical newsletter goto
djnewswires.com
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4247; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets".
-By Stephen Cox; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
Data by Bridge\CRB
(END) Dow Jones Newswires
12-19-02 1411ET |
