▶ TTT-Team: Donnerstag, 01.02.2007

Late-Day Rally..

Dow breaks above 12,550, rallies sharply throughout afternoon.

The Dow opened the session quietly this morning, but eventually got a solid break through the 12,550 zone en route to another all-time record closing high, as seen in the 15 and 60 Minute Charts. The index closed the day near the highs of the session with a solid 98 point gain and is now sitting at all-time highs above 12,600.

Given that the Dow has set another record high, we would assume that the index continues to be highly bullish. However, the Dow must demonstrate the ability to hold confidently above the 12,600 level before we feel this index can continue to rally.

If you look at the three prior rallies in January in the 60 Minute Chart, you notice that every time it rallied, the index was quickly met with heavy selling pressure. Two of the three rallies occurred when the Dow was barely above 12,600. Every new high has been quickly sold off and this new high could be the next to be met with selling. Watch the 12,600 zone for key signs of direction tomorrow, which is the first trading day of the new month.

Short Term Dow

The Dow closed the day above the 12,600 fulcrum, seen in the 5 Minute Chart. Watch this zone for early momentum tomorrow morning.

Medium Term Dow

In the medium term, we entered the market Long today at 12,550 and we are still in the trade with a solid 71 point gain thus far. We will want to hold stops at the entry tomorrow, and will want to stay Long above 12,700. We will hold off on Shorts, unless 12,450 is violated; using 20 point stops.

NASDAQ & S&P

The NASDAQ and S&P each pushed nicely higher from early lows today and now look bullish near-term. Look for potential continuation patterns to build out at highs ahead of the next key move.

Summary

The Dow ended the day with a nice rally through 12,600 today and is currently sitting at all-time highs. If the index can build out a continuation pattern above 12,600, we could see much more strength ahead. Otherwise, another wave of near-term selling is likely.

Thanks for listening, and Good luck in your trading!

Ed Downs
edowns@nirvsys.com

with assistance from..
Frank Ochoa, Sr. Market Analyst
fochoa@nirvsys.com

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