Dow Jones 8200 Support Set to Fail?
For the 5,000+ subscribers of Sean Hannon’s free weekly newsletter, EPIC Insights, the technical breakdown of the Dow Jones Industrials was already revealed yesterday evening. But the analysis was so good I want to share it here on the main blog as well.
The Dow Jones Industrials 8200 level is the current primary focus for many investors both institutional and retail. The strong support that has been established below the now crossing 50 and 200 day moving averages is hard to miss but will it hold up?
In last night’s edition of EPIC Insights Sean made some pretty clear remarks regarding this index that every investor should be aware of,
“First, the 50-day moving average (MA) finally moved above the 200-day MA. Typically this would be bullish and indicate that prices are prepared to move higher. Conversely, we also saw the formation of a head-andshoulders top (blue arrows). This powerful reversal pattern indicates prices will move lower. Since the bullish signal is driven more by a falling 200-day MA than any true strength, I gravitate toward the bearish camp. For weeks I have warned that the internals of the market are weak and lower prices were in the future. This led me to position the portfolio conservatively and prepare for the eventual fall. Now that a head-and-shoulders reversal has formed, a break below 8,200 will quickly send the Dow to 7,600 (red box) and raises the possibility of a retest of the March lows.”
Sean’s portfolio tracked through the newsletter has returned a staggering 24.1% return versus the S&P 500’s decline of 7.4% over the same time period! Subscribing to EPIC Insights is currently free so I suggest doing so if you haven’t already by going here and filling out the first option.
As of 11:06 AM the intraday low on the DOW is 8,205.99. Happy Trading.
