week in review:
the dow, somewhat predictably, "consolidated" sideways for the week, managing a mere 27.20 gain on the week. The topping process, should begin next week. The DJI finished the week with a slightly bearish Doji-like candle pattern (edit However, the higher high somewhat cancells the the bearish nature of the doji signal).
iqc.com
Although the weekly pattern ends on this mildly bearish note, the RSI has not yet reached 70 (my prior, and current, estimate of the top), nor has the stochastics topped out near its local maxima of approximately 95. The ADX has expectedly risen above 50, with a rising +DI, lending support for my earlier ascertation of rising prices early next week (remember, when the ADX is above 50, a continuation of the trend is strongly implied). So, although the candle pattern is mildly bearish (Doji), the ADX strongly anticipates a move to the upside.
The candle pattern seems rather reminscent of the 24th week of 1997, where the slightly bearish doji pattern was actually followed by two bullish weeks, where the RSI rose from about 70 to its most extreme level of 80 (these numbers were eyeballed from the chart. If someone has a free source of historical RSI values, I would appreciate it!). I should emphasize here that in no way do I expect the market to be able to push the RSI to such an extreme level. We have seen diminishing maxima for RSI levels, and I expect that trend to hold.
Daily candlestick analysis:
iqc.com
The daily chart of the DJIA shows a neutral candlestick pattern over the last two days, with a weak bullish finish (implied by the upper shadow on todays dark body, which rises above yesterdays high). The RSI is approaching overbought, but the ADX is above 50 with rising +DI, implying some more upward momentum, but not much.
In conclusion: What a show. I'm on the edge of my seat. <g> |
