Volatile Session
Dow sells off early, but recovers and rallies to the Close.
From prior commentary, "...Given today's downside break, we can expect the index to endure a period of pull-back from the recent highs, seen in the Daily and 60 Minute Charts. Look for the index to test 10,200 soon, as this is the next clear level of concern for the index..." The Dow opened the session with a short-lived pop, but immediately sold off the highs en route to a triple digit decline by mid-day, as seen in the 15 and 60 Minute Charts. However, the index got a sharp v-bottom reversal, which led to a triple digit rally, where the index ultimately closed the day barely higher.
As we mentioned yesterday, the index was likely to test the 10,200 level, which it did. The fact that the Dow received a big 100 point bounce at that level is indicative of medium term strength. The Daily Chart shows that the Dow may be forming a higher low above the upper trend line it crossed in the beginning of May. If the index continues to hold this level, look for the Dow to test 10,400, with a break leading to another big push higher.
Otherwise, a break back below 10,200 will make for another medium term decline back toward 10,000.
Short Term Dow
Short term, the Dow is holding beneath a short term resistance level at 10,310 and has formed a lower trend line, seen in the 5 Minute Chart. Watch for strength above 10,310 and weakness below 10,290 tomorrow morning.
Medium Term Dow
In the medium term, we covered Shorts at 10,294 early in the session, giving us a breakeven trade. We later re-entered Shorts at 10,200, but the trade faltered. We are out of the market and will watch 10,200 down, and 10,400 up; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each exhibited big levels of volatility today, but closed the day at or near the day's highs, which is promising of future strength. Watch for continued overall strength above today's lows.
Summary
The Dow closed the day higher after being lower by over 100 points early in the session. The immediate pull-back from the 10,200 is promising of continued overall strength, especially if 10,400 is solidly broken. However, we may see further range movement between 10,200 and 10,400 before a break either way is seen.
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
** 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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