Dow´s Market Direction for Monday

Expanding Triangle...

Dow trades to upper boundary of expanding triangle, likely to move lower Monday. Watch 8,400 down.


From yesterday's commentary, "...Expanding triangle consolidations imply instibility in the market and are considered bearish patterns...However, the index could trade higher toward the upper boundary of the expanding range before a definitive downside move occurs..."



The Dow rallied to the upper boundary of the expanding triangle today, but continues to look negative within the confines of this pattern. Looking at the 15 Minute Chart, you see that the great levels we have to work with. The index is starting to turn down off the upper boundary of the expanding triangle and will likely continue lower on Monday. We are watching for a break below 8,400 to confirm this. Such a move will indicate that the index is going to indeed continue lower toward the lower boundary of the expanding range, which around the 8,100 area.

On the flip side, if the index breaks above 8,500 Monday, we would then expect to see the Dow move to the upper boundary of the major downward channel, seen in the 60 Minute Chart.

In summary, we have very clear levels, forming a tight range from 8,400 to 8,500. A break through either boundary should dictate the index's primary direction for the day.

Short Term Dow

Short term, the Dow has formed a tight range to watch at the Open for Monday's market. Watch 8,400 down, and 8,450 up for short term direction.

Medium Term Dow

In the medium term, the Dow whipsawed around our Long entry points today, causing our stops to be hit for a total loss of 50 points. For Monday, we will enter Short below 8,400, and Long above 8,500, with 25 point stops.