Updated Wednesday, 1/26 for Thursday's Market
Key DOW Levels for 1/27
UP 11,100
DN 10,850
"11,000 Held - Consolidating.
This is a very important support level. Watch for the break, up or down."
Once again, we consolidated around our 11,000 support line. During the day
on our Special Situations Intraday Commentary, we indicated that a very
tight upside consolidation had formed in the 15 Minute charts across all
indexes. But at the close, the NASDAQ pushed back towards its support
level. The question is, "Will the other indexes head down to their Support
levels as well?"
In order to make money with this market, I don't think we need to answer
that question. There is so much energy stored up here, all we really have
to do is watch for the intraday trendines to be broken to tell us which way
the market will trend. And, after that point, it's going to move a lot, in
my opinion.
If you look at the Daily or Weekly Charts, you can see that 11,000 is
definitely the important support level of the prior move. If we penetrate
it with any force - going through 10,900 - we could easily continue down to
the NEXT support level of 10,600 followed by 10,200 and potentially 10,000
at the bottom. On the other hand, if we suddenly rally off this line, we
could see the market catapult to the upper bounds of the broad channels.
Today, I am seeing evidence of a decline approaching. Look at the Weekly
Chart, and you can see the pattern I have been marking for a few weeks. The
similarity of this time frame to Fall of '98 is uncanny. You can see the
general support line in the center of the pattern. Previously, the market
rallied off this same, relative line.
I thought we would see signs of such a rally today. We didn't get it. And,
in going through my SignalWatch charts today, I am seeing far more Short
candidates than Longs. When this happens, I get cautious - very cautious.
All we can do is watch and see if the indexes rally or push through
support. A rally through 11,100 would indicate strength coming in. However,
if we do drop through 10,900 in the next 3 days, you must conclude a
general decline has probably started, sending the indexes as much as 10%
down from here.
Thanks for listening, and Good Luck in Your Trading!
Ed Downs
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LINKS TO CHARTS:
60 minute Chart
signalwatch.com
Daily Chart
signalwatch.com
Weekly Chart
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