Late Session Rally
Dow breaks down, but holds 10050.
From prior commentary, "...We may see a near-term bounce, should the index break above 10,150 tomorrow. Such a move would indicate strength toward 10,250..." The Dow opened today's session strongly, but promptly reversed to close the gap and break below the key support level of 10,070. However, the Dow held support at 10,050 and did not capitulate. By mid-session the Dow commence a sharp rally back into the wide trading range that has been established over the last 6 trading sessions as seen in the 15 and 60 minute charts. The Dow closed trading near intraday highs with a 122 point gain.
While today's rally was strong, it did little to alter the medium term outlook. Essentially, today's rally has put the Dow back inside the wide trading range which has been established since April 21 as seen in the 60 minute chart. As the Dow remains range bound, we must assume a neutral stance in the near term. A decisive upside break above 10,260 could trigger a profound up move toward previous support at 10,370. Conversely, a sharp break below 10,050 could trigger a sell off toward 10,000. Further weakness beneath 10,000 could trigger a longer term capitulation toward 9,800.
Until the Dow breaks the confines of the recently established trading range, we may see continued consolidation in the near term.
Short Term Dow
Short term, the Dow has formed a upward sloping trendline beneath intraday lows achieved during the late session rally. Look for continued strength above 10,160.
Medium Term Dow
In the medium term, we entered the market Short at 10,050, but stopped out with a 20 point loss.. We are out of the market and will watch 10,260 up and 10,050 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P both displayed a degree of resilience today. Despite trading lower early in the session, both indexes rally to close near intraday highs. However, like the Dow, the S&P and NASDAQ remain range bound.
Summary
While the recent volatility has been remarkable, the Dow continues to trade inside the well established trading range seen in the 60 minute chart. Hence, until there is a decisive break, we will maintain a neutral stance.
Thanks for listening, and Good luck in your trading!
Ed Downs
edowns@nirvsys.com
with assistance from..
C.E. Andrews. Market Analyst
candrews@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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