Dow Jones: Laeuft in einen Keil

Tight Range

Dow drops at Open, holds within tight range.

The Dow got the downside break from the tight range this morning, sparking a sharp decline at the Open. The index came within a handful of points from support at 9,850, and held at the lows the remainder of the session, forming a tight range at the lows, seen in the 5 and 15 Minute Charts.

The Dow is now holding at the lower boundary of an even larger consolidation, seen at the lows of the 60 Minute Chart. The consolidation spans from 9,865 to 10,075, and is the key range to watch for movement in the medium term.

The fact that the range has formed at the lows of a sharp decline implies a likely downside break. A break through the bottom of the range at 9,865 will likely fuel another steep decline. Conversely, an upside push through 10,075 will indicate strength and a likely push higher.

Look for the index to continue trading within the wide trading range until a clear break from it occurs. We could see further sideways action throughout the week before a break is seen.

Short Term Dow

Short term, the Dow ended the day within the boundaries of a clear consolidation, seen at the lows of the 5 Minute Chart from 9,865 to 9,940. Watch for a break from this range for direction tomorrow morning.

Medium Term Dow

In the medium term, we entered the market Short this morning at 9,889, but stopped out at the entry for a breakeven trade. We are now out of the market and will watch 9,850 down, and 9,850 up, with 20 point stops.

NASDAQ & S&P

The S&P and NASDAQ each pushed lower today, as the NASDAQ gapped down, and the S&P pushed lower. Each has now formed clear ranges at the lows, which should provide direction tomorrow. *

Summary

The Dow sold off early in the session and held at the lows throughout the day, forming a tight consolidation. Look for a break from the range for direction tomorrow, though further sideways movement could be seen within the wider range.

Thanks for listening, and Good luck in your trading..

Ed Downs
edowns@nirvsys.com

with assistance from..
Frank Ochoa, 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