Alpha Trend Analysis of the Dow Jones Industrial Average

By: Erich Soltes | Tue, Sep 13, 2005
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This report will examine the Dow Jones Industrial Average on a daily, weekly and monthly basis. A technical analysis for each chart will be presented with explanation on where the security is currently and what needs to occur to maintain the current position. Additionally, long term and short term support and resistance price will be provided.

First a little background information on the Alpha Trend Analysis system. This system has been in development for almost 15 years. The Alpha Trend is the primary trend line that I created. It is an adaptive moving average using trigonometric functions. It is from this primary trend line from which all other formulas are derived. There are six moving average trend lines that are used to analyze a security. The short term indicators are upper and lower bands; these are 2 days in length. The mid term indicator is the Alpha Trend, indicated by the bold red line, which is several weeks in length. Lastly are, the one year moving average which is red colored, the five year moving average which is bright green colored and the ten year moving average which is black colored, of the Alpha Trend. In addition to the moving averages there are six wave bands. These wave bands are called Alpha Trend Wave bands they are Fibonacci advance and retracement of the Alpha Trend. The chart contains two windows. The top window indicates whether the current position is long, short or neutral. A long position is indicated by one (1), a short position is indicated by a negative one (-1) and a neutral position is indicated by a zero (0). The bottom window contains the securities information along with the six moving averages. At the very bottom of the chart the primary trend of either bullish or bearish is indicated.

Above is the Daily chart for the Dow Jones Industrial.

The current position is long and the current trend for the Dow is bullish. The Alpha Trend is trending down and Friday's closing price is 1.3913 percent above the support price of Alpha Trend. Currently, the Alpha Trend Support price is 10,532.0625. The one year moving average of the Alpha Trend is trending up Friday's closing price is 2.0735 percent above the support price of the one year moving average of the Alpha Trend. The one year moving average of the Alpha Trend Support price is 10,461.6816. Since April 22 the Dow has been trending between the 1 st Alpha Trend Wave bands. With the current trend bullish, the Dow should move to the upper 1 st Alpha Trend Wave currently at 10,737.00. The Daily chart is indicating that the Dow should continue to move higher from here.

Above is the Weekly chart for the Dow Jones Industrial.

The current position is long and the current trend is bearish. The Alpha Trend is trending up and Friday's closing price is 2.1991 percent above the Alpha Trend support price of 10,448.8223. The one year moving average of the Alpha Trend is trending up and Friday's closing price is 2.8456 percent above the support price of the one year moving average of the Alpha Trend currently at 10,383.1416. Since the start of the year the Dow has held between the 1 st Alpha Trend Wave Bands. The Dow is in the middle of these bands and should continue to move up to the upper band, currently at 10,904.70. The current trend is bearish, however the current price action suggest that this is ending and should turn bullish.

Above is the Monthly chart for the Dow Jones Industrial.

The Current trend is bullish and the Alpha Trend is trending up. Friday's closing price is 3.6281 percent above the Alpha Trend support price of 10,304.7295. The one year moving average of the Alpha Trend is trending up and Friday's closing price is 7.2256 percent to the one year moving average of the Alpha Trend support price of 9,959.0059. The Dow on a monthly basis has held above the Alpha Trend since end of July 2003. This is a very strong support line and the Dow would need to close below this support price on a monthly closing basis to change to a bearish call for the Dow. The Dow should continue to move up to the 1 st Alpha Wave band currently at 11,299.

Even with the rising oil prices and interest rates the Dow appears to be in a short term bullish cycle. The Dow appears to be moving up to the first resistance price of 10,737.00 after that the next major resistance price is 10,904.70. The major support price range is 10,304.73 - 10,532.0625 with the lower band representing the monthly Alpha Trend price which has held for over two years.

For more information on the Alpha Trend System and the daily newsletter please go to www.alphatrendanalysis.com


 

Erich Soltes

Author: Erich Soltes

Erich K. Soltes
AlphaTrendAnalysis.com

A graduate of Brookfield High School in Brookfield CT and an Eagle Scout, Erich went on to graduate from SUNY Maritime College in New York City in 1988, with a BS in Marine Transportation and a minor in Economics. For the next ten years he was a Navel Reserve officer and a Merchant Marine officer. In 1998 he went to work on Wall Street obtaining his series 7, 63 and 65 licenses. He worked both as a stockbroker and a financial planner helping clients obtain their financial goals. In 2004 he was able to finally reach his goal of developing a mathematical trading model that could beat the "buy and hold" method of investing. In mid 2005 the Alpha Trend Analysis website that you see before was created.

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Erich K. Soltes is the Owner of Alpha Trend Analysis, which contains the opinions of Erich K. Soltes, and is provided for informational purposes only. Neither Erich K. Soltes nor Alpha Trend Analysis, provide individual investment advice and will not advise you personally concerning the nature, potential, value, or of any particular stock or investment strategy. To the extent that any of the information contained in this article may be deemed investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Past results of Alpha Trend Analysis, or Erich K. Soltes are not necessarily indicative of future performance. Erich Soltes, entities that he controls, family, and associates , may have positions in securities mentioned in this article and may close them at any time.

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