David L. Singer

|davidlsinger@gmail.com| 516.830.1786

part

rom

rowd

$INDU – Dow Jones Industrial Average

Trading Strategy On The $INDU (Dow Jones Industrials Average)

Despite the most recent sharp downturn in the $INDU, there is nothing definitively bearish about this chart,covering the prior three months’ action, which reveals a rising price channel. Each time that price reachesthe rising support trend line (channel support), it holds, and moves higher. After each advance higher off that support, price eventually contacts the rising resistance trend line (channel resistance), but fails to breakout to the upside. The colored circles on the chart above highlight this phenomenon. The most recentdecline has pushed prices down to trend line support and no further. In the past, this has been the area fromwhich a rally has occurred.Given the past behavior of $INDU over the past three months, the established support trend line must bewatched. Price may rebound into the declining moving average band, at which time it will likely follow oneof two paths that are discernable from this chart:

Path #1:

Channel support holds, and, after surmounting the moving average band, $INDU rises, breaking out fromthe diagonal trend line resistance that has been confining it during the most recent decline from 10,100.Still moving within the parameters of the ongoing price channel, $INDU should challenge the recent highs.Any breakout above 10,100 is playable on the long side.

Path #2

:Channel support is violated and $INDU breaks down. If that occurs, we should have an unobstructeddecline to the blue horizontal support line around 9430. If that level holds, we should get a rally toward the bottom of the former channel which would now act as resistance. If this happens, we may get the formationof a right shoulder of a head and shoulders pattern, as the left shoulder and head would be fully developed

Annotated Charts and Commentary on The Financial Markets By David L. Singer | November 2, 2009 |

Volume 1 – Issue