Dow Potential RSI Divergence

Dow closed at 9544 on Friday, down 36 points for the session. For the week, the index rose 39 points.

The technical picture is mixed at this point.

The ADX and DIs indicators are indicating a continuing up trend.

RSI is showing a divergence pattern with the Dow making a high this week but with no confirmation from the RSI indictor. This is bearish and suggests a possible sell down.

The MACD indicator is not able to make a decisive crossover with its signal line and it shows that the bull’s strength is waning.

The moving average is showing a bullish picture with the Dow above its 14, 25 and 50 day moving average.

At this point, the bulls and bears are equally matched and there is no clear evidence of where the market is going. However I will lean more towards the bear's camp.

STI Update

Singapore market closed slightly below 2600 level on Friday. This was the first time the market made a series of “Black Candles” since it broke out of the 2424 level on 20 July 09.

Fibonacci retracement level is at 2527 (38.2%) and 2417 (61.8%) respectively.

RSI has dropped from overbought levels and is now at 57 level. There is no RSI divergence at this point and this suggests that the up trend is still intact.

MACD just made a bearish crossover. This indicates weakness in the near term.

+DI is still above –DI. However it looks set to go below the –DI.

The index is still above the uptrend line. Unless the index drops below this trend line, the market should continue to trend higher.