Updated Friday, 11/21 for Monday's market. Key DOW Levels for 11/24 UP None DN None
Big Afternoon Rally.. Dow reverses sharply from 7,450, rallies back above 8,000.
From prior commentary, "...As is typically the case after a very bearish decline, we could see a near-term bounce from lows tomorrow. However, any bounce should be seen as a selling opportunity at this time..." The Dow opened the day with early weakness off the 7,700 level and dropped to 7,450, forming a clear trading range that lasted throughout the session, as seen in the 15 Minute Chart. The index traded back and forth within this range for most of the day, but eventually ripped off a 600 point rally off 7,450 and through 8,000, ending the day with a gain of 494 points. The index has now reached prior support from underneath, which will make early next week very interesting.
The Daily and 60 Minute Charts show the Dow rallied back to the major 8,000 support level, which was cleanly broken yesterday. This is quite a decision point in the index, as a "Kiss of Death" pattern could occur, which would send the index sharply lower after "kissing" broken support from underneath. The index has formed a clear upper trend line across the highs of the three-week decline, which we will watch closely. If the index cannot rise above this line at around 8,500, we will likely make another turn for the worse.
However, the Weekly Chart shows the index held nicely at 10-year support at 7,450-ish. Since the index bounced off this zone so dramatically, we could see a nice near-term advance from these levels. Look for more near-term strength from currently levels, but do not bank on strength to last unless 8,500 is clearly broken.
NASDAQ & S&P
The NASDAQ and S&P each bounced from their respective lows today, but did not get back to the break points from yesterday like the Dow. We could see each index continue to inch its way higher back toward prior support before another significant move occurs.
Tomorrow's Strategy
We entered Shorts at 7,475 today, but stopped out at the entry due to the Breakeven Rule. We are now out of the market and will hold off on new trades at this time.
Thanks for listening, and Good luck in your trading!
Ed Downs edowns@nirvsys.com |