DJIA

open 10,297.63

close 10,405.85 up 103.84

day high 10,480.44

day low 10,297.47

today's volume 191,339,173

3mo avg. daily volume 217,669,169

DJTA

open 4,210.12

close 4,300.24 up 94.92

day high 4,337.68

day low 4,210.12

today's volume 13,369,696

3mo avg. daily volume 20,819,503

Rebound days are fun.  Although most of the movement up occured at open, the market had trailed higher through the day but sold in the later hours back close to what the open push was.  Today was about a 72% up day.  I was asked today by a client when the bottom of the markets were back in March of last year, and what figures we touched.  I couldn't remember, so I went back to the trusty charts.  Two websites I love, for anyone out there whose interested are stockcharts.com and bigcharts.com.  Bigcharts has some nice interactive availabilities (although I prefer the look of stockcharts), so although I looked this up for one reason, I'm struck by two other things.  Below the INDU over the last decade.  What always catched my eye is volume, noting the dramatic increases in volume on the down swing through the end of '08 and beginning of '09.  The second thing I notice is what appears to be a massive head-and-shoulders pattern forming the right shoulder at this time.  Russell made mention of this in his daily yesterday.

For whatever reason,  it seems volume over the past 10 years has build a base around the levels we have now.  Somewhere in the 200 to 250 million a day range, however, there are the spikes, and a pretty lengthy spike between the end of '08 and beginning of '09 during the massive drop.  There were also preceding dips in volume right before the fall.  I added the MACD and RSI, as I mentioned a few weeks ago with RSI, it's an interesting indicator that I'm starting to feel get's far too much emphasis placed on it.  If I showed you simply the RSI for the 10 year INDU's, I doubt the average, or even above-average investor could pick their buy and sell points effectively.

The chart below is a shorter look at the industrials.  The green lines indication the last decline, the blue for our most recent rise.  According to Dow Theory, we're looking for one of two scenarios.  

Here are the two theories laid out... The first would be a break out to the upside above 10,700, which could arguably signal a resumption of the bull market that was arguably halted during April through July correction.  For this to be true we would need to see highs follow trend lines and push towards the 11,000 mark and ultimately beat the April highs, perhaps around the 11,300 mark.

The second theory would indicate a resuption of the bear market which, in this scenario did begin in April of this year.  This would require the INDU to remain below the 10,700 range and inevitably close at or below 9,600.  Should this happen, assume the wheels fall off the market.  


As is the nature of life, both theories have arguments both for and against, however one will prove true.  The TRAN's must confirm.  All the while, I think the value in gold and the USD tell the story.  Gold continues to build higher and higher bases and even seems to be forming a pennant pattern here in the high 1,100's and low 1,200's.  This could signal an upside for gold.  As opposed to previous market moves, gold has been acting independently of ANY other markets, and has stepped out as an independent "finger" in the hand of investing.  

Traditionally, investors could rely on 4 places to put money, USD, Euro, US Markets, European Markets... of late, add two more to the list, Gold Bullion and Asian Markets.  The capitalist in me loves seeing more options on the table.