Round Trip
Dow rallies solidly through morning, but gives back gains with late-day sell-off.
From prior commentary, "...if the index can continue to hold above support, we could see another attempt at prior highs at around 11,300. An upside break through 11,150 will indicate renewed upside interest..." The Dow opened the session with a huge upside push this morning, as the index drove through 11,150 before topping at 11,200, as see in the 15 Minute Chart. The index had rallied over 100 points before staging a big downside reversal to the Close, essentially leaving the Dow with a 10 point gain for the day.
The 60 minute Chart shows the Dow continues to run shy of 11,300, which was the index's best attempt at a breakout two weeks ago. The index may have formed a clear lower high at 11,200 and is now approaching support at 11,050 once again. This level has held firmly for over three weeks and could be tested again soon. A downside break would definitely make for big weakness back toward the 10,850 zone, if not further.
Moreover, the 60 Minute Chart shows the Dow has formed a large head-and-shoulders pattern, with the head poking above 11,300. A downside break through 11,050 would also constitute a break at the neck line, which could be big for bears.
Look for more range movement between 11,050 and 11,200, as the index gears up for the next big move. An upside break through 11,200 will indicate another potential try at 11,300 resistance.
Short Term Dow
The Dow closed the day within the boundaries of a very tight range from 11,080 to 11,120, seen in the 5 Minute Chart. Watch for a breakout from this range for movement at the Open tomorrow.
Medium Term Dow
In the medium term, we entered the market Long this morning at 11,160, but stopped out of the trade at the entry due to the Breakeven Rule. We are now out of the market and will watch 11,040 down and 11,215 up; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each sold off heavily from early gains today, which is not a great sign for bulls. Keep an eye on key support for signs of bigger weakness.
Summary
The Dow rallied hard to begin the session, but easily gave back all the day's gains via a sharp late-day sell-off. The index is now approaching support at 11,050 yet again, which we will continue to watch for big 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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