Love from Spain.Updated Tuesday, 1/16 for Wednesday's Market
Key DOW Levels for 1/17
UP Current Trend
DN Below 10,575
Upside Break
We broke the upper line today, and appear poised to move to
the top of the channel. Holding stops at 10,575
From yesterday's commentary,"Now, look at the 60 Minute
Chart. The interesting thing here is we have a downward
sloping pennant, which is reasonably strong for an upside
break - and we will be watching the line at 10,625 for that
event..... "
Bingo. We rallied today and broke our line at 10,600. So,
we are now Long. This is a good sign that the Dow is going
to rally, because it was showing weakness below the fulcrum
we had drawn at 10,575. We will hold our mental stop there
and see if it is crossed this week.
Short Term Dow
Short term, I would watch the tight trendline across the
recent lows intraday - at about 10,630 and short that line
for a quick move back to the fulcrum. Since we have
crossed our primary line, it is difficult to determine
whether the market will continue or consolidate. Odds
favor a further upside run, in my experience.
Medium Term Dow
We have cleared our trading range, and appear poised to
move on to the top of the channel at 10,800. We are Long
and holding our mental stop at 10,575. Looking at the 60
Minute Chart, I see high odds of a further move up from
here - very high. I'd just get Long and hold your mental
stop at the fulcrum level (10,575). Everything I can see
in the chart - especially the strong support off the lower
boundary of the consolidation at 10,500 - says "up" to me.
Of course, I could be wrong. If we cross 10,575 down, exit
Longs and wait for the next move.
NASDAQ Composite and
OEX (S&P 100)
The NASDAQ formed a beautiful consolidation pattern today,
with a solid base at 2,575. For this reason, I am
expecting to see an upside break tomorrow of the 2,625
level, followed by a fairly clean run to 2,900. This
pattern can clearly be seen in the 15 Minute Chart. **
The OEX is also forming a bullish consolidation, but has
not quite finished the pattern. We are watching 695 for
the eventual upside break, and the green light. On the
downside, our "out" level is 685 - a point of key support
on this index.
In Summary:
Nice sign of enough strength to push the market higher
today. We are now Long and holding reasonably tight stops
at Dow 10,575 and NASDAQ 2,575. All we can do now is hold
on and see what the next trading session brings. Looks
pretty good at today's close - just keep those stops in and
exit if they are violated.
Thanks for listening, and good luck in your trading!
Ed Downs
----------------
* Short term vs. medium term. We define short term as 1-4
days, and medium term as 1-4 weeks. This column is designed
for both types of trading/ investing.
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----------
"What to Trade?"
I received a very nice email from Mr. Walsh asking what
symbol to trade to mirror the movements we discuss on this
page. What I would suggest is, that you look for
individual issues which are poised to gain the most from a
break of one of our levels. I know this is a bit more
work, but you will often get a nice "spring" effect and
also reduce your risk.
You can certainly trade the indexes directly (DIA, QQQ,
etc.) but I think your results will be better if you focus
on the issues which will move the most on any given
incentive. Good question - thank you, Mr. Walsh.
Thanks.. Ed Downs
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