Consolidating..
Dow trades sideways at highs, holds within clear triangle consolidation.
From prior commentary, "...The index hit a clear resistance level at 10,400, which we will watch closely Monday. Look for continued range movement between 10,300 and 10,400 until this range is broken..." The Dow held firmly within the boundaries of 10,300 and 10,400 today, as the index traded sideways throughout the session, forming a clear triangle consolidation at the highs of the recent overall advance. The 15 and 60 Minute Charts show the triangle is well formed and has developed above the major downtrend line that was broken last week.
This type of behavior is exactly what is needed if a change of trend is to occur. That is, for the Dow to finally change the downtrend into a bullish run, the index must continue to form continuation patterns at highs and forming support levels along the way.
Watch the boundaries of the consolidation tomorrow, as a break will likely lead to another sharp move. Watch 10,400 up, and 10,325 down for a violation tomorrow. A break either way should yield clear movement.
Short Term Dow
Short term, we will watch the major 10,400 resistance level, seen in the 5 and 15 Minute Charts for direction tomorrow morning. A break or bounce off this level will likely indicate the day's direction.
Medium Term Dow
In the medium term, we are still out of the market and will watch 10,400 up, and 10,325 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each trended slowly higher after bottoming out early in the session. The S&P has formed a continuation pattern at the highs, while the NASDAQ continues to trend higher within the boundaries up an uptrending channel.
Summary
The Dow ended the day near the highs of the session and continues to trade within the boundaries of a clear triangle consolidation. Watch for the index to continue to 'wind up' before a solid break occurs. Watch 10,400 up, and 10,325 down tomorrow.
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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