Pulling Back And To The Sideline

The market has finally culminated to more than a minor pull back. Since the beginning of July, the DJIA 50 SMA (green line) begins to turn from a rising trend toward a falling trend, and the index has been retreating since it made its new all time high on 9/18/2013.

At the present, the DJIA closed near the 14760 support level where a supporting trend line and the nearby 200 SMA (encircled) intersect. The confluence at this possible support level could generate a temporary bounce to one of the potential resistance level. One possible resistance is the 78.6% Fib retracement level near 15000. Another potential resistance level could be either the 20 EMA or the 50 SMA. From this bounce, the DJIA could resume its up trend if it can break through the resistance. If it cannot break through these resistance or the bounce fails to materialize, then it could retrace back toward the 14020 to test for possible support.



Until the market has completed its retreat and found support level to propel it back into an uptrend, sideline (cash position) could be a good place to be.