V-Top Reversal
Dow rallies strong at Open, but gets massive sell-off from highs.
From prior commentary, "...The market is not ready to commit to strength or weakness at this time. Look for continued range-bound activity until a clear and solid break occurs. An upside through 10,620 will indicate near-term strength within the range..." The Dow opened the session with a sharp advance this morning, as the index tore through 10,600 before topping out at around 10,640, as seen in the 15 Minute Chart. The Dow then turned down off of 10,640 as it proceeded to sell-off in a very aggressive fashion, eventually dropping 115 points from the day's highs.
The Dow closed the day higher by just 11 points, but continues to trade within the boundaries of the large trading range despite today's rather active session, as seen in the Daily and 60 Minute Charts. The range still spans from 10,500 to 10,725, which has housed the range activity for the last six weeks of trading.
In the near-term, it would be wise to hold off from trading within the boundaries of this range until a clear and solid breakout occurs. A downside push through 10,500 should spark quite sell-off in the longer term; while an upside push through resistance at 10,725 should make for clear-cut strength.
Watch 10,650 for signs of early strength tomorrow.
Short Term Dow
The Dow closed the day at near-term resistance at 10,570, seen in the 1 Minute Chart. Watch for a break or bounce from this level for movement at the Open tomorrow.
Medium Term Dow
In the medium term, we entered the market Long at 10,627 this morning, but stopped out with a 20 point loss. We later entered Shorts at 10,525, but the trade also faltered.
We are out of the market and will watch 10,500 down, and 10,725 up; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each sold off heavily from early rallies today, but continue to remain within their respective channels. Look for continued range/channel activity until a real breakout occurs.
Summary
The Dow closed the day just above the flat line after quite a fast-paced session. The index continues to trade within the boundaries of the major trading range, which we will continue to watch heading into tomorrow's market.
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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