We had a nice rally up for many weeks and now Dow is at resistance area. Right now it is consolidating rather than selling off and that is a good sign. Despite the US government shut down, the fact that Dow is still able to consolidate shows us that market participants are not selling yet.
Resistance areas can be a tough area for the market to overcome and thus a sideways consolidation is good to take away the supply that is present in these areas. Once there is enough consolidation, the market may breakout higher.
Let us take a look at what the charts are telling us.
The above is the daily chart of Dow futures. The whole red area is a potential resistance area and this supply needs to be absorbed. A consolidation here and then a break above the downtrend line will be good for the market.
The weekly chart of Dow Futures tells us the importance of the market breaking above a downtrend line.
SPY is also at resistance area like the Dow and it needs to trade sideways a bit to absorb the supply.
Apple has had a big sell off but it is trading near a support area in the monthly chart. Plus the stochastics is getting oversold and it is near the monthly 50 MA. A reversal near this area will be good for tech stocks and the market as a whole.
The weekly chart of SMH shows us that semis are trying to break above a weekly downtrend line. If it can continue to rise, this will be good for semis and tech stocks.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
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