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Dow Industrials defensive below 10,000

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Friday's Dow Industrial close back below the 10,000 level will most likely weigh on market bull's psychology near-term and current trading has taken this widely watched market index near a level of support.

Dow Jones Industrial Average - Daily Interval

The current technical found in the Dow Industrials (INDU) depict that of caution. We'll be monitoring the 9,982 level closely where we find an upward trending 50-day MA and 50% retracement. MACD on the daily interval chart is rolling lower with MACD having crossed below the signal line. Should the Dow fail to hold the 9,890 level, look for a break lower back to the 9,750 level where we might expect MACD to be approaching the zero level.

Last week we profiled a bearish trade in the S&P 500 with the SPDRS (AMEX:SPY) to try and take advantage of some of the weakening we felt was beginning to take place. In the next hour we'll cover that trade and look at some of the broader bullish percent data to give everyone insight as to what we need to be looking for. Many of the bullish percent charts are still bullish, but near higher levels of risk for bullish traders. Thus a more defensive posture is needed.

Market Monitor

We've added a fairly new feature to the market monitor this morning and trying to put up some chart links of different stocks and indexes to give everyone a quick snapshot of the supply/demand data. Feedback has been positive and most seem to like the quick view they get of things.

Jeff Bailey
Senior Market Technician
Option Investor

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