Dow Jones: Rechtzeitig zum Neujahr

Still in the Range

Dow forms clear range at highs, watch for upside continuation.

The Dow continues to hold at the highs of the current upswing, as the index continues to honor the key lower trend line, seen beneath the lows of the 15 and 60 Minute Charts. The index held firmly above the 10,400 level, and has formed a clear trading range at the highs from 10,405 to 10,460, seen in the 15 Minute Chart.

The fact that the index continues to hold above 10,400 and has formed a bullish consolidation hints at further upside movement in the medium term, which is pretty amazing considering how far we have come. A solid upside break through the top of the range at 10,460 will make for another wave higher within the steep uptrend, especially if 10,400 remains in tact.

However, rectangle consolidations are powerful on both sides. A break below 10,400 will likely lead to a strong retracement and such a move should be shorted.

Short Term Dow

Short term, the Dow has formed a clear trend line beneath the lows of the late-day rally, seen in the 1 Minute Chart. A downside break at 10,450 will indicate weakness Friday morning. Otherwise, look for strength at the Open.

Medium Term Dow

In the medium term, we are still Long the Dow from 10,190 and will continue to hold stops at 10,400, locking in 210 points of profit for the trade to this point. We will want to stay Long above 10,460, and will look to enter Shorts below 10,400, with 20 point stops.

NASDAQ & S&P

The NASDAQ and S&P each sold off slightly throughout the session, but the late-day rally could inspire a move higher Friday. Each index has formed a consolidation at the high, which implies further strength. *

Summary

The Dow continues to hold at the highs of the current uptrend, and has formed a clear continuation pattern as well. An upside break through 10,460 will make for continued upside movement, while a break below 10,400 will mark weakness for Friday's market.

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