Winding Up..
Dow bounces from lows, winds up within clear consolidation range.
From prior commentary, "...The index will likely continue to wind up from 12,250 to 12,365 over the next day or two before a breakout occurs. A breakout from this tight range will likely give us a medium-term view of what may come..." The Dow opened the day with a fair bit of weakness today, but eventually bounced off support at 12,250 before ending the day with a rather mild 13 point loss, as seen in the 15 and 60 Minute Charts. The Dow continues to wind up within a large consolidation range that spans from 12,250 to 12,360, which we'll want to watch for the next big breakout move.
The fact that the Dow has developed this range at recent highs is indicative of an upside break. Further, looking at this range in a 60 Minute Chart shows that it could be a right should to a large inverted head-and-shoulders pattern, which is also a bullish pattern. Watch 12,360 closely tomorrow, as an upside break could spark a huge advance to all-time highs.
A downside break through the bottom of the range at 12,250 will spark a test of the major lower trend line at 12,200, which could offer a fair bit of support. However, if this line is cleared with follow-through, we could see a big decline ahead.
Short Term Dow
The Dow closed the day within the boundaries of a tight range from 12,300 to 12,330, seen in the 5 Minute Chart. Watch this range closely tomorrow for an early directional move.
Medium Term Dow
In the medium term, we are still out of the market and will watch 12,375 up, and 12,225 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each sold off heavily through the first part of the session, but rallied off lows with conviction, which bodes well for a potential upside break tomorrow.
Summary
The Dow closed the day well off the session's lows after bouncing off key near-term support at 12,250. Look for continued range movement within the consolidation range until a solid breakout is seen.
Thanks for listening, and Good luck in your trading!
Ed Downs
edowns@nirvsys.com
with assistance from..
Frank Ochoa, Sr. Market Analyst
fochoa@nirvsys.com
** Note: We are now posting Index entries and exits in Real Time, through our new Intraday Index Alerts service. To learn more about the service, visit SignalWatch.com and select Intraday Alerts from the main navigation bar. - SW Team
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