Updated Wednesday, 8/27 for Thursday's market.
Key DOW Levels for 8/28
UP Above 11,560
DN Below 11,325
Consolidation Breakout..
Dow breaks through 11,450, rallies 90 points.
From prior commentary, "...If the right shoulder (consolidation) is broken to the upside at 11,450, however, we could see another test of prior highs at around 11,600..."
The Dow opened the day quietly within the 100 point consolidation range this morning, but eventually broke the range to the upside at 11,450, sparking a solid rally up to the 11,555 level, as seen in the 15 Minute Chart. The index eventually pulled back from highs, but still managed to close the session with a gain of 90 points. The index is now winding up within a much larger pattern, which we will now turn our attention to.
The 15 and 60 Minute Charts show the Dow closed the day with a bounce off a new upper trend line. Combine this line with the lower line from the last two weeks and you get a large triangle pattern that is clearly winding up for a big breakout opportunity. We could see more development within this range until a solid breakout occurs. Eventually, a breakout could spark the next two-week move. Watch 11,560 up, and 11,325 down for signs of a breakout.
Short Term Dow
The Dow closed the day within a tight range from 11,450 to 11,555, seen in the 5 Minute Chart. Watch this range for early direction tomorrow morning.
Medium Term Dow
In the medium term, we entered the market Long at 11,450 this morning, but stopped out at the entry due to the Breakeven Rule. We later re-entered Longs at 11,499, but also closed the trade for zero loss.
We are out of the market and will watch 11,560 up, and 11,325 down; using 25 point stops.
NASDAQ & S&P
The NASDAQ and S&P each rallied early in the day, but pulled back from highs late in the session. Each index is building out within clear patterns that could offer nice opportunities soon.
Summary
The Dow ended the day with a nice gain, but is clearly winding up within a potentially explosive pattern that could spark big movement ahead. Watch this pattern closely.
Thanks for listening, and Good luck in your trading!
Ed Downs
edowns@nirvsys.com
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