Steady Advance
Dow trends steadily higher, trades back to prior support.
From prior commentary, "...the Dow has finally reached the clear upper trend line that has formed across the highs of the latest decline that stretches back to early March. This is a key line in the charts that will lead to the next big break or reversal. Watch for movement away from this line at 10,300 in the near term..." The Dow opened the session quietly this morning, but ultimately got a decisive break of the major upper trend line at 10,300, seen in the Daily and 60 Minute Charts. The break led to a steady advance the remainder of the day worth 128 points and has finally reached the prior broken support level at 10,360.
The Daily Chart shows the Dow has trended back up to the major broken support level at 10,360, which also happens to be the 38% Retracement level from the March highs to the April lows. Markets tend to change trend at key Fibonacci Retracement levels, so watch 10,360 (38%) and 10,500 (50%) for reactive zones.
Given the break of the major upper trend line, we can assume continued upward momentum in the medium term, especially should the index form a continuation pattern. Look for the index to either consolidate at the highs or form a higher low to indicate continued strength. A break back below 10,300 will indicate a sizeable pull-back.
Short Term Dow
Short term, the Dow has formed a clear trend line beneath the lows of today's uptrend, seen in the 5 Minute Chart. Watch for strength above this line, unless 10,370 is crossed to the downside.
Medium Term Dow
In the medium term, we entered the market late in the day at 10,360 and are still in the trade. We will hold stops at 10,360 for tomorrow's market and will want to stay Long above 10,425. We will look to enter Shorts below 10,300; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each opened the session quietly higher, but eventually trended steadily up the remainder of the day. Look for continuation patterns to form to indicate that further strength is likely.
Summary
The Dow got a decisive upside break of the clear upper trend line at 10,300 today, setting off a steady advance to the Close. Look for the index to remain in near-term bullish mode, especially if it can form a continuation pattern at the highs tomorrow. Look for continued overall strength unless 10,300 doesn't hold.
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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