Consolidating..
Dow pushes higher, forms bullish consolidation at the highs.
From prior commentary, "...The Dow continues to trade within the boundaries of a potentially bearish expanding trading range, which is developing at the lows of the 60 Minute Chart...An upside push through 10,450 could spark a steep rally toward the top of the range at around 10,600 tomorrow. Watch this level for early strength..." The Dow opened the session with a break through 10,450 this morning, which set the tone for an positive trading session, as seen in the 15 and 60 Minute Charts. The Dow gained 37 points on the day and has now formed a clear consolidation at the highs of the recent advance.
The fact that the Dow has formed a bullish consolidation at the current highs implies further strength toward the top of the larger range at around 10,575, seen in the 15 and 60 Minute Charts. Look for the Dow to continue consolidating at the highs until a break occurs. An upside push through 10,485 will likely spark a steady uptrend toward 10,575. Otherwise, a break back below 10,420 will indicate another test of critical support at 10,365.
As long as the index continues holding above major support at 10,365, further range movement is very likely. Look for continued range movement between 10,365 and 10,575, as the index resumes its volatile behavior before the next big break.
Short Term Dow
Short term, the Dow ended the day beneath a clear short term resistance level at 10,480, seen in the 5 Minute Chart. Watch for weakness below this level tomorrow morning, unless an upside break occurs.
Medium Term Dow
In the medium term, we covered Shorts at 10,450 today, giving us a 25 point gain for the trade. We later entered Longs at 10,470, but closed the trade for a loss. We are out of the market and will watch 10,485 up, and 10,420 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each pushed higher right from the outset today and have now formed tight consolidations at the highs. An upside break from the consolidation is implied, but a break either way should yield movement.
Summary
The Dow closed the day slightly higher today, but has now formed a bullish consolidation that may spark further strength tomorrow. Watch for a break from the consolidation for movement tomorrow. An upside push through 10,485 will indicate further strength; while a break below 10,420 will lead back to critical support.
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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