| Updated 9/28 for Wednesday's market. |  | ||||||||||||||
Reaction RallyDow rallies off lows, ends day at session highs.From prior commentary, "...Typically, markets do not tend to trade in one direction without getting a pull-back or two along the way. Look for the index to pull back off the lows, possibly getting a reaction rally in the process..." The Dow opened the session lower today, as the index pushed to new lows before getting a solid v-bottom reversal, as seen in the 15 Minute Chart. The index reversed sharply off the day's lows, rallying 120 points off the bottom to end the day higher by 89 points, as seen in the 60 Minute Chart. Now that the Dow has gotten a noticeable reaction rally, we may be in for another steep decline in the overall downtrend. Look for the Dow to either form a wide trading range at the lows from 9,975 to 10,100 or form a lower high beneath 10,100. Both scenarios call for the index to continue trending lower in the medium term toward the lower boundary of the major channel at 9,750, seen in the Daily Chart. However, an upside push through 10,100 will make for continued near term strength toward 10,200. Use 10,100 as a fulcrum for tomorrow's market. Short Term Dow Short term, the Dow may be forming a higher low above 10,075, seen in the 5 Minute Chart. Such a pattern typically implies short term strength. Look for strength above 10,100 tomorrow morning, unless 10,075 is crossed to the downside. Medium Term Dow In the medium term, we covered Shorts today at 10,050, giving us a very nice 115 point gain for the position. We then entered Longs at 10,050, but stopped out with a loss. We later re-entered Longs at 10,062, and are still in the trade. We will continue to hold stops at the entry and will stay Long above 10,125. We will look to enter Shorts below 10,050; using 20 point stops. NASDAQ & S&P The NASDAQ and S&P each pulled back off their respective lows today, making for gains on the session. Look for each to form a continuation pattern at the lows, which would imply continued weakness. Otherwise, continued near-term strength is likely above resistance. * Summary The Dow ended the session sharply higher today, after getting a solid v-bottom rally off the lows. The index pushed higher throughout most of the session, closing the day just beneath the key 10,100 level, which is a clear fulcrum in the charts. Look for either a trading range or lower high to form tomorrow. Thanks for listening, and Good luck in your trading! Ed Downs with assistance from.. ** 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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