Updated Wednesday, 9/17 for Thursday's market.
Key DOW Levels for 9/18
UP None
DN None
Another Big Drop..
Dow drops 449 points, hits new lows for the year.
From prior commentary, "...The Dow has reached the 11,100 zone, which has been a major fulcrum in the charts over the last two weeks. If the Dow breaks above this zone tomorrow, we could see another rally back toward 11,450. Otherwise, a failure in this zone could result in another test of lows..."
The Dow opened the day with another major bout of selling pressure this morning, as the index got a major downside reversal from the 11,100 level, seen in the 15 Minute Chart. The Dow dropped to 10,700, but rallied to 10,900 before dropped 300 points to the Close, ending the day with a huge loss of 449 points.
The Dow has hit new low for the year for the second straight session, but looks poised to head lower, especially should the index remain beneath 11,100. The 15 Minute Chart shows the Dow has formed a clear trend line across the highs of the week's highs. More overall weakness is likely to occur beneath this line, unless it is crossed at 10,900.
On a longer term note, the Dow reached the 50% Fibonacci Retracement level of the rally that began with the 2002 lows to the highs of 2007, seen in the Weekly Chart. This is a major retracement level that has been reached after a huge five-year rally. Watch current lows for signs that a move to 62% will be seen at around 9,825.
Short Term Dow
The Dow closed the day through support at 10,650, seen in the 5 Minute Chart. Watch this zone for early direction at the Open.
Medium Term Dow
In the medium term, we entered the market Short at 10,725, but stopped out with a 25 point loss. We later re-entered Shorts at 10,693, but the trade also faltered, resulting in a breakeven trade.. We are out of the market and will hold off on new trades at this time.
NASDAQ & S&P
The NASDAQ and S&P each sold off sharply throughout the session and closed at the lows of the day. Look for more overall selling pressure within the current downtrend.
Summary
The Dow closed the day at the lows of the session after dropping sharply late in the session. The index has reached new lows for the year in an emphatic manner, which could lead to more selling ahead. Look for more overall selling unless 10,900 is crossed and held.
Thanks for listening, and Good luck in your trading!
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