More Bullish Biased (2011-03-31 DJI analysis)

HSI had a big gain yesterday, and it closed at 23451, which is around 150-250 points from the resistance level mentioned in Monday's post. Then we have to see whether the investors could successfully boost the index to higher levels.

Today, let's see how's the US market is doing.



Above chart is the daily chart of Dow Jones Industrial Average (DJI). It had been moving upwards gradually from Aug 2010 to Feb 2011.

Due to what happened in Japan, it dropped dramatically and broke the long term up-trend red line.

Luckily, without more tragedies happening, it started to rebounce in mid-March. And now it is finally back to the level of previous high, and would have to face a big resistance.

In addition, the red line is continuing its up-trend, giving a higher and higher support level to the index. Currently we could expect support at around 12250.

DJI being pushed to the corner, volatility would jump in near future. This aligns with the prediciton on VIX as well.

For sure, if it chooses to break downwards, it could head down to 11,600 until it finds its ground.

If DJI breaks upwards instead, it could get up to around 13,000 given the previous rising trend.

Nevertheless, there is still room for MACD to surge, there isn't much force stopping the index to boost. I will have a more bullish biased view on US stock market.