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The Dow Jones And Technical Analysis

Stock Market Update Tuesday November 21, 2023 The Dow Jones And Technical Analysis Understanding Recent Trading Patterns and Trends A Shift in Buying Momentum After a Monday marked by structured and steady purchasing, the following day brought a noticeable change in market behavior. Tuesday saw significantly less buying activity, leading to a relatively quiet day for the major indices. This shift resulted in what is known in technical analysis as an "inside day" price bar on most charts.

The Significance of an Inside Day

An inside day is characterized by the day's trading range being entirely within the range of the previous day. This pattern often suggests a continuation of the existing trend, though it leaves the task of identifying the specific trend to the technical analyst. In such scenarios, it's essential to interpret these signals within the broader context of market movements.

Spotlight on the DJIA

A notable example of recent market dynamics can be seen in the Dow Jones Industrial Average (DJIA). Early in November, the DJIA chart exhibited what appeared to be a halfway measuring flag structure. This pattern, known simply as a flag, typically forms after a sharp upward or downward movement (the flagpole) and represents a pause or consolidation before a potential continuation of the trend.

In the case of the DJIA, the breakout above the top of this flag structure suggests a possible upward move, with a projected target around 35,750 to 35,850. This level aligns closely with the highs seen in late July. Additionally, a smaller flag-like structure observed at the end of last week could be indicative of another halfway point in an ongoing upward trend, seemingly fulfilling the first flag's projected movement.

Caution for the Bulls

While this upward trajectory may seem promising, it's important to note that a market that continually moves upward can lead to an overextended condition. Such scenarios can eventually pose challenges for bullish investors, as extended markets are often prone to corrections or reversals.

The momentum from the bulls eased off slightly, with the Nasdaq declining by 0.6%, effectively relinquishing about half of its gains from the previous day's rally. In the bond market, there was little change, as the long bond (30-year Treasury) held steady at 4.57%, and the two-year note experienced a slight decrease, dropping three basis points to 4.86%. In the commodities market, gold briefly surged past the $2,000 per ounce mark but eventually closed around $1,999. Meanwhile, West Texas Intermediate (WTI) crude oil prices hovered around $78 per barrel. The Volatility Index (VIX), continuing its recent trend, stayed below the 14 mark for the fourth consecutive session.

Today was the highly anticipated earnings for Nvidia Corp. which is our favorite stock in our long only portfolio.

NVDA Stock Chart Tuesday November 21, 2023
NVDA Stock Chart Tuesday November 21, 2023

DIA ETF Stock Chart Tuesday November 21, 2023
DIA ETF Stock Chart Tuesday November 21, 2023


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