At Support

Dow pulls back within large range, holds at key support at 10,070.

The Dow opened the session weak this morning, as the index pulled back from yesterday's highs right from the outset. The index traded slowly sideways for much of the session before finally breaking 10,100 en route to a triple digit decline, as seen in the 15 and 60 Minute Charts.

The 60 Minute Chart shows the Dow is finally breaking the lower boundary of the sloping trading range, which implies another big medium term decline. However, the index closed the day right at support at 10,070, which we will watch closely tomorrow. A break at this level will likely lead to further weakness toward 10,000.

We may see a near-term bounce, should the index break above 10,150 tomorrow. Such a move would indicate strength toward 10,250. However, significant strength is not likely unless this level is clearly penetrated.

Short Term Dow

Short term, the Dow has formed a tight consolidation at the lows of the 5 Minute Chart from 10,070 to 10,105. Watch for a break from this range for movement at the Open.

Medium Term Dow

In the medium term, we entered the market Short at 10,100, but stopped out with a breakeven trade. We are out of the market and will watch 10,200 up, and 10,050 down; using 20 point stops.

NASDAQ & S&P

The NASDAQ and S&P each trended slowly lower today, as each broke key lower lines in the charts. Look for signs of a continuation tomorrow, as further violations will lead to another medium term decline.

Summary

The Dow ended the day at the lows of the session after breaking 10,100 late in the afternoon. The index looks to be gearing up for another big medium term decline, especially if 10,000 is broken.

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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