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Dow Jones Industrial Average gives weekly reversal

August 12, 2013

Last week, I showed the weekly RSI and MACD divergences on the SPDR Dow Jones Industrial Average (DIA).

The daily RSI criteria were not quite met but nor were they on any other market or sector ETF. Weekly criteria (which are more important) were met on many series.

SPDR Dow Jones Industrial Average (DIA)

DIAWEEKLY

There has been a weekly reversal bar, which was one possible entry method stated. This has a tighter stop loss than obtainable from a move below the intervening weekly RSI low.

Daily chart

DIACANDLES

A daily close below Friday’s low of $153.33 will be a clearer indication of a top than we currently have. Then, a short position will be opened with a stop loss above the 02 August high of $156.24.

Gold

The position in the Philadelphia Gold & Silver Index (XAU) has recovered and the stop loss is moved to break even. The entry signal for the pair involving Agnico Eagle Mines (AEM) was not triggered last week. It will likely be met this week, given today’s action in gold. There is now much better commonality of these signals for gold stocks relative to the S&P500 Index than a few weeks ago.

Coal and coal stocks

The bullish divergence set ups anticipated in February and followed up on in June have now set up. These are backed up by the coal price having a bullish weekly RSI divergence.

I will revisit this soon but coal stocks are a buy relative to the S&P500 Index. Only the entry criteria and whether to wait for a pull back remain as questions.

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