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DJIA to Fall 4,000 Points in 2012, Granville Says

Jan. 23 (Bloomberg) -- Joseph Granville, a technical analyst who has been publishing the Granville Market Letter from Kansas City, Missouri, for more than 40 years, talks about the outlook for the U.S. stock market. He speaks with Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Watch video at http://www.bloomberg.com/video/84758540/

Joseph Granville - On-balance volume

On-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. OBV is based on a cumulative total volume.

Total volume for each day is assigned a positive or negative value depending on prices being higher or lower that day. A higher close results in the volume for that day to get a positive value, while a lower close results in negative value. So, when prices are going up, OBV should be going up too, and when prices make a new rally high, then OBV should too. If OBV fails to go past its previous rally high, then this is a negative divergence, suggesting a weak move.

The technique, originally called "cumulative volume" by Woods and Vignolia, was later named in 1946, "on-balance volume" by Joseph Granville who popularized the technique in his 1963 book Granville's New Key to Stock Market Profits[1]. The index can be applied to stocks individually based upon their daily up or down close, or to the market as a whole, using breadth of market data, i.e. the advance/decline ratio.

OBV is generally used to confirm price moves.[4] The idea is that volume is higher on days where the price move is in the dominant direction, for example in a strong uptrend more volume on up days than down days.

Info Source http://en.wikipedia.org/wiki/On-balance_volume

Gold Spot XAUUSD Cross Channels Analysis

September 2011 was an exciting and an interesting month for gold trading. All time high was established at 1921.14 on 6th September 2011. The formation of this second peak heralded a potential double top chart pattern which was confirmed when the support at 1703.13 broke on 23rd September 2011. As swiftly as the double top confirmation was proclaimed a new trough was formed the next trading day 26th September 2011 at 1532.80 at the violet support zone as indicated on the chart.

The seed of a new potential upswing was thus planted at the tail pivot of the giant hammer candlestick bar. The struggle to advance was met with strong resistance at the red channel zone and the testing of the violet support channel has proven that a break below the violet channel will signal a potential major fall in gold price.

As the Eurozone crisis persists gold regained its upswing momentum and emerged above the red channel zone into the green double top support channel area. A successful challenge above this green channel will see imminent resistance at the blue channel region. A Golden Christmas and Glittering New Year awaits only if a strong upthrust decimate the bears stationed here.

A retest of 1921.14 all time high is back in play if the blue bears are defeated. 2012 will then see gold price approaching the brown upper channel at 2000 and above.

Conversely, if the current support at the green channel gives way a retreat downwards back to the red channel is expected. Strong support can be found at the violet channel region. A breakdown from this strong support area will plummet gold price towards 1500 and below.

Dow Jones Industrial Average Weekly Chart Testing Critical Supports

1. Testing of critical 200SMA weekly support in progress. A successful rebound from this support will be challenge by the pink immediate resistance zone.



2. The 200SMA weekly confirmed the complex head and shoulders reversal pattern formed in 2007 and 2008. In 2010 it confirmed the failed head and shoulders formation.



3. DJIA has retraced towards the lower channel support region. There is a high probability that the lower green channel support may be tested. Immediate support is indicated by the green zone.



4. Any upward surge above the pink immediate resistance area will see a retest of the 12000 milestone. Further upthrust will reclaim the red bold downtrend resistance line followed by the next resistance shown by the light blue zone.



5. Conversely if the green immediate support band give way the 10000 milestone will be tested followed by the next support region indicated by the yellow rectangular box.

Genting Bearish Engulfing Pattern

Bearish Engulfing candlestick pattern formed as price approached strong resistance zone as indicated by the red bear icons. High probability that there will be a test of both the lower channel support and the gap support shown by the red rectangle zone. A weak bullish support may see further decline towards the Ichimoku cloud. A breakdown below the bold blue 200 EMA support will most probably signal further declines.

Global Logistics Properties 30 mins chart Testing Critical Supports

Critical orange support and red dual uptrend support being tested on 30 mins chart. Support failure here will result in further declines. Conversely, a successful rebound will probably test previous resistances.

Potential Supports

1. Blue support band

2. Pink support area

3. Green all time low major support belt


Potential Resistances

1. Ichimoku Storm Cloud

2. Resistance band at 2.30 to 2.29

3. All time high peak resistance 2.33