We saw last week that Dow Jones Industrial Average fell to new low and I was predicting that DJ will touch the 2002 low at 7,100. However, it did not touch exactly on 2002 low but it rebounded with a weekly gain to cheer for the Thanksgiving.

Dow Jones Resisted by 20d MA

After the strong rebound for a straight 5 days, Dow Jones is now trading near the 20d MA resistance at 8,600. This again become a critical level to watch because break above this resistance will send Dow Jones to retest the 50d MA resistance. Failure to break up this resistance will form another lower high, couple with the recent lower low, this is another new beginning of a down trend.

Another key observation is the volume is going down while the price is going up. That’s a bearish divergency and I think the stock will definitely pull back again on Monday.