Dow Jones Index 6-Aug-10 (Limited Upside)

Previous update on 31-Jul-10 indicate formation of a ascending triangle (Purple line) which is still intact. Prices have been testing the upper border of the triangle and the lower border of the prior long term uptrend (Green line).

Two doji (Blue circle) formed after testing lower border of the triangle indicate some strength in the rally. However, taking into account the decreasing volume and the overbought conditions indicated by the various indicated, expect strong resistance at 10,800 levels even if a break-out is to occur.
At 10,800, there is only 1% upside compared to 7% downside (10,000) if prices are to pull back.

Dow Jones Index seems to support view on Straits Times Index (Refer to 30-Jul-10 post) in being overbought and showing downside potential.

Strategy now is to gradually close long positions and take up short positions in stocks showing weakness.