DIA Returns to the Gap
By Arthur B. Hill - Tue 21-Oct-08 11:13 AM EDT
In a volatile week with huge swings, the Dow Industrials ETF (DIA) returned to Wednesday's gap with another 10% move. The magenta lines on the 30-minute chart show the zigzag indicator, which measures movements that are 10% or more. As you can see, there was an advance greater than 10% on 12-13 October, a decline greater than 10% from 14 to 16 October and an advance greater than 10% from 16 to 21 October. There was a day when these swings would look impressive on a weekly chart. Obviously, this is not your father's Dow.
With these big swings, the Dow Industrials ETF (DIA) remains stuck in a volatile range and short of a breakout on the daily chart. I am watching two items to signal a trend-changing breakout. First, the pullback on Tuesday-Wednesday established key resistance around 99. Mondays' surge was impressive and Thursday's recovery affirms support, but we have yet to see solid follow through and a resistance breakout. Monday's low volume advance does not look solid. Second, the Commodity Channel Index (CCI) moved below –100 in early September and momentum remains bearish overall. At the very least, CCI needs to break into positive territory. However, I would like to see a surge above +100 to show some real strength and turn momentum bullish. Be sure to checkout the corresponding video for more details.
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Dow Industrials ETF (DIA) – click here
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