The Dow’s trend line from late June to early December has notably accelerated the past few weeks, taking the index into an overextended condition. Combined with the recent break of the 8 week trend line suggests a possible moderate correction.

DJIA breaks short term uptrend (2 Months)
(click for full size chart)

DJIA

Source: Gary B. Smith, RealMoney.com

The longer term uptrend is still well intact, with support coming in at 10,200 and 9850 on the Dow. We expect any short term correction, barring new information or events, to be less than 7%.

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Category: Finance

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