December 20, 2016 / 2:31 PM / 7 months ago

BUZZ-DJI post-election rally still looks to extend

2 Min Read

** Despite weakening internals and a slowdown in the recent leadership , DJI bullish pennant coupled with a lack of clear RSI divergence, suggests post-election rally still has further to play out

** DJI currently up 11.2 pct since election day close, attempting 7th-straight week of gains if finishes Fri above 19843.41; last such streak Oct 17-Dec 05 2014, Dow rallied 9.6 pct

** High of week ending Dec 05, 2014 marked short-term top, index sold off 5.1 pct over next 2 weeks

** That said, bullish pennant argues rally off early Nov low not over yet; index can see another flurry higher to challenge 20150, potentially 20481. Chart: reut.rs/2hQoZXI

** Just last week, DJI daily RSI reached its most overbought since Jul 1955; has since dipped

** With new Dow highs, above 19966.43, however, RSI should fail to exceed Dec 13 peak, diverge; set stage for post-election rally to peak, market to correct

** Similar pattern played out after Jul 1955 peak reading; DJI slipped, made marginal new high, then sold off 4.2 pct

** However, with weekly RSI yet to show divergence, market can still see higher highs later in Q1 2017

** Value stocks tripping vs growth since Dec 08 ; Goldman Sachs responsible for 25 pct of DJI's 1550 pt gain since election day close, a slight drag since last week's Fed rate hike

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