| Updated 5/12 for Thursday's market. |  | ||||||||||||||||
Afternoon RallyDow drops at Open, but gets powerful afternoon rally.From prior commentary, "...A downside break from the consolidation at 9,950 will likely spark another steep decline toward the 9,800 level. Look for the index to continue trending lower toward 9,800, since this level represents the lower boundary of the wide sloping range..." The Dow got the downside break from the sloping consolidation today, sparking a steep decline throughout the morning, seen in the 15 Minute Chart. The index traded all the way down to the lower boundary of the wide, downward-sloping range at 9,850, seen in the Daily Chart, before getting a powerful reversal off the lows. The Dow rallied 200 points off the session lows in the last two hours of trading, getting an emphatic reversal off the lower boundary of the major trading range at 9,850. This could be the turning point for the index and the trend, as we could see a continuation higher toward the upper region of the range over the course of the next week or two. Look for the Dow to continue trending higher toward 10,400 in the medium term, especially if support at 9,850 holds. However, we could see the index form a continuation pattern at the highs of today's rally, as is usually the case after such a strong move. Such a pattern will indicate strength. A break back below 9,950 could begin the formation of a new trading range at the lows. Short Term Dow Short term, the Dow ended the day within the boundaries of a tight range from 10,020 to 10,050, seen in the 1 Minute Chart. Watch for a break from this range for direction at the Open. Medium Term Dow In the medium term, we are still Short the Dow from 10,180, since the 10,050 level barely held late in the day. We will continue holding stops at this level tomorrow. We will stay Short below 9,850, and will look for Longs above 10,050, with 20 point stops. NASDAQ & S&P The S&P and NASDAQ sold off early in the session before blasting off late in the day. Each got a solid reversal off the lows, which hints at a continuation higher tomorrow. * Summary The Dow got a round trip session today, as the index sold off early, only to rally late in the day, ending the day higher by 26 points. Sharp reversals such as these usually foreshadow a steep rise in the following days. Watch for a continuation higher within the wide, sloping trading 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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