The Dow Looks Optimistic Technically

The Dow Jones Industrials Index (DJ-30) (^DJI) has broken above its December 2008 high and resistance level. The next test for the DJ-30 will be @ 9500 resistance levels. (See daily chart below for reference.)

While there concern that the overall market condition for equities is shifting toward an overbought bias, analysis of the DJ-30 shows only 4 out of its 30 underlying components are overbought while only 1 out of 30 is oversold. This should give these 30 bellweather bluechips a little more room to run.

However, contrary to Jack and the Bean Stalk, trees do not grow straight to the sky.  The Dow Industrials have posted positive returns in 5 out the last 6 trading sessions and may need to take a consolidation rest to digest gains before resuming its rally.

In-depth trend analysis of the Dow Industrials reveals the following: 1) 29 out of 30 components are in short-term uptrends; and 2) 11 out of 30 components are in intermediate uptrends and 5 out of 30 components are in intermediate lateral trends (in other words, @ half of the Dow have established intermediate term support).

Technically, the overall market condition for the Dow Industrials looks optimistic.

Related Securities: Diamonds Trust ETF (DIA) and ProShares Ultra Dow 30 ETF (DDM).

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