Updated Friday, 9/5 for Monday's market.
Key DOW Levels for 9/8
UP None
DN None
Mid-Day Bounce..
Dow drops throughout morning, but gets 200 point bounce from lows.
From prior commentary, "...The Dow has now sold off steadily throughout the week since topping out Tuesday at 11,790. This drop of 615 points is a whole lot in just three trading days, which could mean a modest reversal may be seen..."
The Dow opened the day with another round of heavy selling pressure this morning, but eventually bottomed out 35 points shy of the major 11,000 point, as seen in across all timeframes. The index reversed sharply from lows and proceeded to rally over 200 points to the Close, ending the day with a gain of 33 points.
The 15 and 60 Minute Charts show the Dow has gotten a nice bounce after the initial decline. This bounce could extend into next week, as the Dow reaches back toward the 11, 300 level. Look for the index to touch this zone next week, maybe even reaching up to 11,400.
However, despite this bounce, the Dow should continue to be considered bearish so long as it remains beneath 11,800. A break below 11,000 could unleash much bigger selling pressure ahead. Look for the index to potentially build out between 11,000 and 11,400 before another big move occurs.
Short Term Dow
The Dow closed the day within a clear 100 point range that spans from 11,150 to 11,250, seen in the 5 Minute Chart. Watch this range closely at the Open Monday.
Medium Term Dow
In the medium term, we are still Short the Dow from 11,391 and currently hold a gain of 180 points. We will continue to hold stops at 11,300 and will hold off on additional trades.
NASDAQ & S&P
The NASDAQ and S&P each dropped at the Open, but rallied into the Close, which could make for more strength early next week. However, more overall weakness is likely within the overall downtrend.
Summary
The Dow closed the day with a nice 200 point bounce today, but continues to hold near the lows of the week's lows. The Dow continues to be highly bearish, but we could see a near-term sideways-to-up move before another round of selling occurs.
Thanks for listening, and Good luck in your trading!
Ed Downs
edowns@nirvsys.com
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