Late-Day Collapse
Dow holds gains through much of session, but sells off hard to the Close.
From prior commentary, "...As such, we could see the Dow trade within the boundaries of 10,800 and 10,960 for the next week or so before we see a decisive break. However, it seems clear that whenever the Dow does break 10,800 or 10,960, a solid move will result..." The Dow did indeed remain within the boundaries of the large trading range today, but looks eager for a breakout. The 15 and 60 Minute Charts show the Dow rallied back to the top of the range at 10,925 before selling off back to the 10,850 level to end the session. The index ended the day with a 22 point gain, but it seems that volatility is beginning to pick up within the pattern.
We will continue to watch the trading range in the near term, as a breakout from this consolidation will likely unleash a solid week-long move. Watch 10,925 up tomorrow, as an upside break will likely lead the index to test the 11,000 level. However, given the determination of the selling late in the day, the level most likely to get attention is 10,800. A downside break here will force a retest of the 10,700 zone.
Short Term Dow
The Dow closed the day with a big sell-off today, but closed the day right at 10,850, which has been a fulcrum within the range. Watch this level for direction at the Open tomorrow.
Medium Term Dow
In the medium term, we are out of the market and will watch 10,800 down, and 10,930 up; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each dropped hard to the Close today, either wiping out gains for limiting them drastically. A downside break through key lower levels could extend this sell-off tomorrow.
Summary
The Dow closed the day with a steep decline after having a fairly bullish session. This late-day weakness could be a precursor to a break at 10,800. Watch this level closely tomorrow. Otherwise, further sideways movement is likely to occur between 10,800 and 10,930.
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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