Evening Traders! In the last market update we talked about seeing a short term topside reversal occurring with the overall market following the big pullback, and that's exactly what we've seen. If you haven't read our previous market update, get it here! Over the past 8 days we've seen the market trending topside. After the DJIA came down and broke some key support prices, we were finally able to settle right above that key 15340 support level. Since then we've seen a topside move which has broken above that descending 20sma and closed above it. We've seen essentially the same move with the SPX as well after setting that 1812.29 low which is now a key support level.
Going forward it is important to understand that the overall market is still rather shaky. I do not expect to see this current reversal get anywhere close to setting a higher high on the chart. After we form the next high from this run, the key will be to watch and see if we set a higher low or lower low on the chart. If we come down and break the 15340 support level, I fully expect to see the DJIA trend downward into the mid 14,000 level. At this point, we'll continue to focus on the key support and resistance levels labeled below in red (resistance) and green (support). I do expect to see the daily chart begin to pullback following this run within the next 5-7 market days.
Again, keep a close eye on the daily DJIA chart to see if we do come down and break that 15340 level. If we do, as stated I expect to see the DJIA trend downward into the mid 14,000 level. In the month of January we saw the SPX down roughly 97.96 total points, recovering from our previous update where it was down 157.71 points following the 15th of January. The DJIA was down 939.18 for the month of January, up from being down 1417.4 on our previous market update on the 15th. Below you will find the DJIA daily chart with key support and resistance levels labeled. As usual, if you have any questions, let me know! Have a great day!