Sharp Advance
Dow breaks consolidation to upside, rallies strongly to the Close.
From prior commentary, "... the Dow continues to trade above the upward sloping trend line seen in the 60 minute and daily charts. Provided this trend line remain intact, we are likely to see continued strength..." The Dow opened the session fairly quietly today, as the index basically traded sideways within the boundaries of a tight consolidation, as seen in the 15 Minute Chart. However, the index eventually got a very solid upside break from the consolidation late in afternoon, sparking a sharp advance to the Close. The Dow ended the day higher by 80 points and could be poised to continue higher tomorrow.
Several factors in the charts point to further strength in the near term. First, the Dow broke a clear upper trend line at 10,250, seen in the 60 Minute Chart. This break implies further overall strength. Moreover, the Daily Chart shows a series of higher lows above 10,000, which indicates a put above 10,400 for the first time in a while.
However, given today's sharp and steady advance, we may see a period of 'rest' tomorrow, as the index form a continuation pattern. If the Dow can hold above 10,250, continued strength is likely. Otherwise, a break back below this level will make for weakness back toward recent lows, especially if 10,200 is violated.
Short Term Dow
Short term, the Dow has formed a tight lower trend line beneath the lows of the late-day advance, seen in the 1 Minute Chart. Watch for strength above this line, unless 10,320 is crossed to the downside.
Medium Term Dow
In the medium term, we closed Longs at 10,230, giving us a 20 point loss. We later re-entered Longs at 10,275 and are still in the market. We will hold stops at 10,285 and will want to stay Long above 10,400. We will hold off on Shorts, unless 10,200 is crossed to the downside.
NASDAQ & S&P
The S&P mirrored the Dow today, each index broke clear ranges en route to a nice late-day rally. The NASDAQ, on the other hand, rallied just fine, but continues to hit new highs within the already established uptrend.
Summary
The Dow closed the day sharply higher today after breaking a tight intraday consolidation to the upside late in the day. The index will likely hold at the current highs tomorrow, possibly pulling back a bit as it consolidates before the next move. Continued strength should be seen above 10,250.
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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