| Updated 1/13 for Wednesday's market. |  | ||||||||||||||||
Down MoveDow breaks consolidation to downside, trends lower.From prior commentary, "...The fact that the index has formed a consolidation at the lows implies a continuation lower...A downside break from the consolidation at 10,440 will likely extend Friday's downmove, leading to a larger retracement..." The Dow barely peaked above the 10,500 level this morning, but quickly pulled back, leading to an eventual downside break from the consolidation formed during yesterday's trading. The downside break at 10,440, seen in the 15 Minute Chart, sparked weakness the remainder of the session, where the Dow closed the day lower by 77 points. Looking at the 60 Minute Chart, you see that the index continues to retrace after breaking the lower channel boundary Friday afternoon. This is by far the largest retracement within the current uptrend. We may see similar activity until the index can find support, especially if the Dow stays below 10,500. A solid upside push through 10,500 could spark the formation of a wide trading range at the highs of the major uptrend. Short Term Dow Short term, the Dow ended the day within the boundaries of a tight consolidation that has formed at the lows of the 5 Minute Chart from 10,370 to 10,430. A downside break from this range is implied tomorrow morning, but watch for a break either way to indication short term direction. Medium Term Dow In the medium term, we covered Shorts this morning at 10,497, giving us a breakeven trade. We later entered the market Short at 10,440 and are still in the position, with stops at the entry. We will want to stay Short below 10,350, and will look to go Long above 10,500, with 20 point stops. NASDAQ & S&P The NASDAQ and S&P each pulled back the entire session today, but the NASDAQ was able to find a solid source of support. Watch support closely tomorrow, as a break or bounce here will likely determine direction. * Summary The Dow continues to decline after having broken the major lower trend line of the channel. Look for a continued downtrend to occur until the index forms a base at support. Further downside is likely below 10,500, however, a break above this level could offer strength. 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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Gruss,
Parocorp
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