| Updated 1/12 for Tuesday's market. |  | ||||||||||||||||
ConsolidatingDow trades sideways, forms tight consolidation at lows.From prior commentary, "...The downside break of the steep channel implies a likely retracement, one that is overdue at this point. However, the index will likely form a continuation pattern at the lows before direction either way is seen. Look for the index to consolidate at the lows Monday..." The Dow opened the session quietly this morning and ultimately ended the day stagnant, as the index traded sideways the entire session, as seen in the 15 Minute Chart. The day's sideways activity led to the formation of a tight consolidation that has formed at the lows of the recent decline, seen in both the 15 and 60 Minute Charts. The consolidation spans from 10,440 to 10,490, which will be the boundaries to watch for tomorrow's market. The fact that the index has formed a consolidation at the lows implies a continuation lower. Such is typically the case after a major trend has been broken. A downside break from the consolidation at 10,440 will likely extend Friday's downmove, leading to a larger retracement. However, looking at the 15 and even the 5 Minute Charts, you'll notice that the consolidation is in the shape of a saucer. Saucer bottoms typically result in a move higher, therefore, we will watch 10,490 for an upside break to indicate strength. However, the index must break through 10,525 if significant strength is to be seen. Short Term Dow Short term, the Dow ended the day right at short term resistance at 10,490, seen in the 5 Minute Chart. Watch this level closely, using it as a fulcrum for short term direction for Tuesday's Open. Medium Term Dow In the medium term, we are still Short the Dow from 10,497 and will continue to hold breakeven stops. We will add to Shorts below 10,440 and will look to enter Longs abvove 10,525, with 20 point stops. NASDAQ & S&P The NASDAQ and S&P trended slowly higher throughout the day, leading to a gain for the session. The NASDAQ led all indexes with solid gains and is now sitting at resistance. Watch this level closely tomorrow. * Summary The Dow traded sideways throughout the session today, forming a tight range at the lows of the recent decline. The consolidation implies further weakness in the medium term, but the Dow ended the day at the upper boundary of the range, which could set off a saucer reversal. Watch 10,440 down, and 10,500 up for direction tomorrow. 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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