Continued Uptrend
Dow breaks range to upside, trends higher to the Close.
From prior commentary, "...The index closed the session lower by 42 points, and now looks to be forming the framework of a continuation pattern at the highs of the recent advance...This is a key decision point in the chart, as a move away from this line will likely dictate the next major move in the market..." The Dow did indeed form a continuation pattern, as the 60 Minute Chart shows the index formed a higher low above 9,985 before rallying to new highs today. The index trended higher throughout the session today, gaining 69 points for the day, but may continue sharply higher in the medium term.
The Daily and 60 Minute Charts show the Dow has gotten a clear upside break through the top of the major downtrending channel at 10,050. This break implies a likely continuation higher toward the 10,350 area, which happens to be the upper trend line of the wider downward channel from the Daily Chart. Look for further medium term strength, especially if the index continues to hold above 10,025.
We may see another pull-back before further strength is seen, however. A pull-back below 10,100 will indicate initial weakness Monday; while a break below 10,050 could spark an even steeper retracement.
Short Term Dow
Short term, the Dow has formed a clear trend line beneath the lows of the 5 Minute Chart. A downside break through the line at 10,100 will indicate weakness Monday morning.
Medium Term Dow
In the medium term, we entered the Dow Long today at 10,100 and are still in the trade. We will continue to hold stops at the entry Monday, and will want to stay Long above 10,150. We will look to enter Shorts below 10,025; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each proceeded to trend higher today after forming continuation patterns within the current uptrend. Look for continued movement within the uptrend, until a downside break occurs. *
Summary
The Dow got another solid move higher today, as the index continues to push out of the major downtrending channel. Look for continued upside movement as long as the index holds above 10,025. A downside break at 10,050 will indicate weakness, but a break below 10,025 could spark a large retracement.
Thanks for listening, and Good luck in your trading!
Ed Downs
edowns@nirvsys.com
with assistance from..
Frank Ochoa, 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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