Updated Friday, 8/22 for Monday's market. Key DOW Levels for 8/25 UP None DN Below 11,300
Rally & Hold.. Dow rallies 200 points at Open, consolidates at highs.
From prior commentary, "...The Dow will likely continue to build out the consolidation from around 11,300 to 11,500 before a final breakout occurs..." The Dow opened the day with a huge upside break from the three-day consolidation at 11,450 this morning and rallied 200 points in the first 75 minutes of the day. The index then consolidated at highs the rest of the day, preserving a gain of 198 points.
The 15 and 60 Minute Charts show a very tightly-wound triangle has formed at highs, which we will watch very closely for early direction Monday. If you look closely, you see today's consolidation has formed precisely at the lower boundary of the large channel boundary, essentially setting the stage for a potential "Kiss of Death" pattern. This pattern is quite bearish and occurs when price rises to touch a broken pattern from underneath before another wave of selling occurs.
If the Dow gets an upside break from the tight consolidation we could assume that the channel has been "redrawn" using the 11,300 lows. Watch 11,650 and 11,550 for early movement Monday.
Short Term Dow
The Dow closed the day within a very tight range that spans from 11,585 to 11,630, seen in the 5 Minute Chart. Watch this range closely for early direction Monday morning.
Medium Term Dow
In the medium term, we are still out of the market and will watch 11,300 down; using 25 point stops. We will continue to hold off on Longs at this point.
NASDAQ & S&P
The NASDAQ and S&P each rallied sharply at the Open and closed near their respective highs. Watch the intraday consolidations Monday.
Summary
The Dow rallied in big fashion this morning and consolidated the rest of the day. The index looks quite strong after rallying from 11,300, but could falter beneath 11,650. Watch this fulcrum next week.
Thanks for listening, and Good luck in your trading!
Ed Downs edowns@nirvsys.com
|