Slow Decline
Dow continues decline within sloping range, holds at key 11,100 level.
From prior commentary, "...the index continues to trade within the boundaries of a clear sloping range. Look for continued range movement in this zone until a clear and solid breakout occurs. Watch 11,250 and 11,100 for medium term direction...” The Dow trailed slowly, but steadily lower today, as the index slide down the lower boundary of the sloping range for the second straight session, as seen in the 15 and 60 Minute Charts. However, the index has reached the key 11,100 level, which could be a big break or reversal zone in the charts.
Looking at the 60 Minute Chart shows the lower boundary of the sloping range intersects at 11,100, thereby making this level either a break or reversal zone for the range. Moreover, the Daily and 60 Minute Charts show that a major lower trend line has formed beneath the lows of the last two-plus months of trading. This line also intersects at 11,100, making this zone a highly confirmed level by two patterns and multiple timeframes.
A downside break through 11,100 will likely make for an even greater slide in this index; one that could be in the range of 200 points fairly quickly. On the other hand, a sharp upside reversal through 11,150, and eventually 11,200, could make for a powerful trend line reversal that leads to new highs. This is definitely a crossroads in the charts that could pack some punch.
Short Term Dow
The Dow has formed a clear trend line across the highs of the latest decline, seen in the 5 Minute Chart. An upside break through this line at 11,140 could make for nice strength Monday morning.
Medium Term Dow
In the medium term, we are still out of the market and will watch 11,250 up, and 11,100 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ continues to wind up at the highs, while the S&P followed the Dow's lead yet again. Look for the NASDAQ's lead upon a breakout from its consolidation for movement from the broader market.
Summary
The Dow ended the day at the lower boundary of the sloping range and precisely above 11,100, which is a key level in the charts. Keep an eye on this level as a break or bounce could be big for medium term movement.
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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