ED DOWNS cooments. I like this guy:
Updated Sunday, 12/5 for
Monday's Market
Key DOW Levels for 12/6
UP Through 11,450
DN Through 11,200
Pennant Prevails!
Exciting market. But, watch
11,200 down.
From Thursday night: "..it
looks like the pennant
theory is going to hold, and
this market is going to
trade higher in December.
..I would expect continued
rallies to form, as long as
we stay above 10,960"
What an amazing session.
Absolutely amazing. You
can look at that 60 Minute
chart now, and see the
clear follow-through on the
pennant pattern we
described last Wednesday.
And, the small consolidation
at the end of the day
Thursday was the flashing
green light!
With a move like that, you
have to be in a bullish
mindset, although I see
many "market mavens" are
saying "stay out of the
market." My personal
approach is to try, real
hard, to be neither bear nor
bull (though sometimes, I
do get a bit lop-sided).
I was in fact bearish in my
thinking on Monday, but
when the formation
indicated a pennant
breakout was forming, I had
to change my mind.
This is where so many folks
get clobbered. Of course,
we'd all like to predict the
market. But the fact is,
none of us can. It's a
moving target. But, we CAN
look for clear evidence of
what tomorrow may bring,
and then formulate a game
plan. That is my objective
on SignalWatch, and if you
ever see me stray from
that, please send me an
email!
Getting back to the market,
let's see what we have
now. If you were long
before that move you are
clearly a very happy
camper. If you weren't long
(or worse, short), you may
be thinking "now is the time
to get in." Here is what I
see...
You have a clear
consolidation target,
measured in the 60 Minute
Chart, and based on the
previous move, right at the
high - 11,400. You can see
the market backed off a
little at the end of the
session very close to this
number.
Whenever you have a move
this big in one day, you
have to be prepared for the
"head fake" (a football
term). I would keep a close
eye on support at 11,200.
If we trade back through
this level, I would exit all
Longs to take profits and
wait for a new move back
through 11,300.
If we power up at the open
and take out 11,400
immediately, I would stand
aside a bit. The market
needs to form an assault on
the high, and the way I
would expect this to
happen would be to see a
consolidation just under
11,400 that lasts a few
days - the perfect behavior
would be a trading range
between 11,400 to 11,200
for a week or so. If that
happens, buy again when
we break 11,400.
On the downside, a move
through 11,200 could be
shorted, but with the
strength we saw Friday, I'd
be very hesitant about
taking a large short
position. Look for selective
shorts - either from
Premium SignalWatch or
your own overbought
candidates, but be ready to
cover quickly.
My personal feeling is that
"the bull is back" but we
have 20 trading days to
Y2K, and a lot can happen
between now and then!
Stay neutral in your
thinking. We'll take it day
by day, play by play.
Thanks for listening, and
Good Luck in Your Trading!
Ed Downs
---------------
LINKS TO CHARTS:
60 minute Chart
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Daily Chart
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Weekly Chart
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