Market Analytics and Technical Considerations

Key Points

Early in December, there ought to be some volatility, and the Dow Jones Industrial Average appears to be most at risk.

People who formerly thought the Dow was a pointless index were now looking for reasons to admire it. Yes, the Dow is currently in the lead. The S&P 500 still hasn’t succeeded in surpassing its high from August, but it has. The Nasdaq is nearer to 15% less than its summer top, while the Russell 2000 is roughly 7% below its high from August.

In actuality, only the S&P and the Dow have thus far surpassed their early November highs. The Russell 2000 and Nasdaq are still trading under their recent peak. The Transports are also lower from their peak 2 weeks ago. The Bank Index is also. The PHLX Semiconductor Sector is the same  – Nasdaq100.

Industrials, Healthcare, and Staples are the stocks of the Dow that have risen above their recent highs. And the Utes, too. The craziest thing about all of this is that, not that long ago, people declared unequivocally that they would not be bullish until growth stocks led again. However, here we are. Equities are not dominating, and sentiment is gradually improving.

The Investors Intellect bulls, who are currently at 41.7% and approaching the August top rating of 45%, are showing a more optimistic slant. The bears are still just over 30%, but this week that may change.

Back to the Dow, though. Currently, the 50-day moving average bar is above 96% of the Dow stocks. When it reached 100% in early June 2020, this statistic was last this high.

Zooming in reveals that the Dow Jones Industrial Average experienced a good swing higher that lasted for 4 days. It immediately fixed to the tune of 9%, leaving an island overhead. It was not bad. While it wasn’t generally bearish, it undoubtedly diminished momentum and increased volatility. The weaker holders were shaken loose.

We mentioned and believed it was appropriate for the dollar to end its upward momentum, you may have noticed that the Dollar Index has been circling around that 106 level. This is the area for which was  estimated a measured objective. For the time being, I’d suggest it is more likely to trade in the 104-110 range.

In late September, as the dollar reached its peak, the DJIA reached its bottom. The Dollar Index’s peak during the revisit of the DJIA’s trough in mid-October was lower. As a result, the dollar has been declining while the DJIA has been rising. Maybe another rationale for the Dow to adjust would be if the dollar steadied or perhaps rose.

Candlestick Formation

Candle Time Nov 28, 2022 09:00am 2 Candles Ago

Bearish reversal signal

Low Reliability

Explanation After an upward gap, there occurs a sudden sell-off during an uptrend. The candlestick, however, closes at or very close to its high. This suggests that there may be further sell-offs in the future. A black candlestick or a significant down gap followed by a lower closing on the following candlestick can indicate a trend reversal because the certainty for a Hanging Man indication is low.