Holding..
Dow trades sideways entire session, holds at upper boundary of channel.
From prior commentary, "...The Dow ended the day lower after reversing down near the top of the bearish channel. We will continue to see weakness in the medium term until this channel can be broken with conviction..." The Dow opened the session slowly higher today, as the index met the upper boundary of the highly bearish downtrending channel, seen in the 15 and 60 Minute Charts. The index traded sideways the remainder of the session, giving way to the major upper trend line at 10,530.
Given today's market behavior, we will likely see another very steep decline within the boundaries of the channel toward a target of about 10,365. Look for a break below 10,450 to indicate a steady continuation lower tomorrow, especially if the 10,550 remains in tact. An upside break through 10,550 will indicate a major breach of the upper trend line, indicating the potential for strength.
Short Term Dow
Short term, the Dow held at support at 10,480 throughout the session, seen in the 1 and 5 Minute Charts. Watch for strength above this level, unless a break occurs tomorrow morning.
Medium Term Dow
In the medium term, we entered the market Long today at 10,520, but stopped out with the late-day reversal. We are now out of the market, and will watch 10,550 up, and 10,450 down; using 20 point stops.
NASDAQ & S&P
The NASDAQ and S&P each traded mostly sideways today, staying within the boundaries of their respective channels. Look for the likelihood of another decline within the channel's boundaries, unless the upper trend line is violated.
Summary
The Dow closed the day quietly higher today, but is banging against the resistance of the upper trend line of the channel, which we will watch closely tomorrow. The last three days of market movement heavily favor another very steep decline within the channel tomorrow. However, strength may finally enter the market upon a break through 10,550.
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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