Bullish Continuation
Dow resumes steady advance, breaks through key 11,650 level.
From prior commentary, "...the fact that the index was able to hold firmly above support is mildly bullish. An upside break through the top of today's consolidation at 11,520 could spark a nice near-term really back toward the 11,575 zone..." The Dow continued right where it left off yesterday, as the index basically resumed its steady uptrend to the Close, as seen in the 15 Minute Chart. The index finally got a solid break through major resistance at 11,650 and eventually closed the day with a nice 94 point gain.
The index continues to push steadily higher within the boundaries of the bullish channel and closed at the highs of the year today. This is quite a feat to scrape its way all the way back to the year's highs, given that the Dow had to rally about 1000 points in just two months.
The Dow definitely looks very confident right now, but hasn't had a major retracement throughout this 1000 point rally. Basically, we will continue to monitor the lower trend line of the bullish channel, as a downside break could finally set the stage for a moderate retracement within this overall uptrend.
However, as long as the index continues to hold above 11,500, continued overall strength is likely, especially if 11,750 is taken out.
Short Term Dow
The Dow has trended fiercely higher since yesterday's lows, forming a clear lower trend line in the process, seen in the 5 Minute Chart. A break of this lower line at 11,640 could spark early selling tomorrow.
Medium Term Dow
In the medium term, we entered the market Long at 11,650 today, but stopped out with a 20 point loss. We later re-entered Longs at 11,654 and are still in the trade. We will continue to hold stops at 11,634 and will want to stay Long above 11,700. We will hold off on Shorts, unless 11,580 is crossed to the downside; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each closed the day at the highs of the session, but the tech-heavy index was much more reluctant to breakout to new highs, which could weigh on the market tomorrow.
Summary
The Dow closed the day with a solid gain after chugging higher throughout the session. The index is now at the highs of the year and could be headed higher. However, if the index cannot convincingly rise and hold above 11,700, we could see a near-term retracement first.
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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Lars Halter - Wall Street CorrespondentsDer marktbreit gefasst S&P-500-Index schloss am Montag auf einem neuen Fünfeinhalb-Jahres-Hoch von 1326 Punkten.
