| Updated 1/23 for Monday's market. |  | ||||||||||||||||
Downside BreakDow breaks consolidation to downside, trends lower to the Close.From prior commentary, "...The formation of the consolidation at the highs is a positive sign, and implies a continuation higher in the medium term...A downside break from the consolidation, however, is still possible and would likely result in a break back below key resistance..." The Dow opened the session quietly today and traded sideways within the consolidation boundaries before finally getting a big downside break later in the session, seen in the 15 Minute Chart. The downside break from the consolidation sparked a steady move lower, resulting in a 55 point loss. Looking at the 60 Minute Chart shows that the index has broken back below resistance at 10,600, which could extend the time that the index spends within the wide, ill-formed trading range, which spans from 10,375 to 10,660. As mentioned before, the index is very likely to remain within the current overall uptrend that began in late November, seen in the Daily Chart. A downside break of the major lower trend line at 10,500 would cause either a steep sell-off or the formation of a very wide trading range at the highs. Watch 10,500 closely Monday. Short Term Dow Short term, the Dow ended the day right at short term resistance at 10,568, seen in the 1 Minute Chart. Watch this level closely, using it as a fulcrum at the Open. Medium Term Dow In the medium term, we closed Longs in the market at 10,600, giving us a 40 point gain for the trade. We then entered the market Short at 10,600 and are still in the position. We will continue to hold stops at the entry for Monday's market and will stay Short below 10,500. We will look for Longs above 10,660, with 20 point stops. NASDAQ & S&P The NASDAQ and S&P each sold off the day's highs, leading to a steady downtrend the remainder of the session. Each index may now have formed wider trading ranges, which could hold near term action. * Summary The Dow got the downside break from the consolidation this morning, which sent the index into a day-long downtrend. Look for a continuation lower if 10,500 is breached Monday. Otherwise, look for continued movement within the given range. 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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