Love from Spain.Updated Thursday, 6/7 for Friday's Market
Key DOW Levels for 6/8
UP Through 11,100
DN Through 11,075
Back to 11,100
The Dow is consolidating below an important "line in the
sand." Watch for break or bounce.
From yesterday's commentary, "The way to bet in the short
term is for a continued push down, since we consolidated at
11,100 and are about half way to the target at 11,000....
For Thursday, I would simply watch 11,100. As long as we
are below it, stay Short and watch for an upside trend line
break"
Nice. We moved down from 11,100 and continued all the way
down to exactly 11,000, forming a bottom there and
reversing at a clear trend line break at 11,040. We then
rallied right back to 11,100. This puts us in a great
position to trade Friday, since we are sitting just under
this important level.
Clearly, we are somewhat vulnerable here, since we are
sitting just underneath an important resistance level. If
we start down again, the action could lead to a much
stronger retracement. The bottom line? A break through
11,000 that holds will be bullish, and a push through
11,025 down will be short term (and possibly medium term)
bearih.
Short Term Dow
In the very short term, watch 11,075 down and 11,100 up.
That's a tight range, but essentially where we consolidated
today. At this point, I'd say we favor an upside break, by
a thin margin.
Medium Term Dow
We were basically watching 11,100 today for action, but
ended up rallying through our break line at 11,075 and thus
are now Long. We will hold our stop at 11,075 and exit
there, but wait to go short until 11,000 is crossed. As I
say, it is most likely that we will break 11,100 because we
consolidated just under it, but this is an important
resistance line. So, we could bounce down off the line
instead.
NASDAQ Composite and OEX (S&P 100)
We broke 2,240 on the NASDAQ in the early afternoon, after
forming a very nice downward sloping consolidation in the
morning, which we noted in our Intraday Alerts. The break
was clear and decisive at about 1:30 Eastern. Now, we have
consolidated and appear ready to take on 2,300. we are
watching the important 2,250 level for signs of weakness.
The OEX looks a lot like the Dow, and we are watching 657
there for signs of backsliding.
In Summary:
I still believe 11,100 is the dividing line between bulls
and bears in this market, and this theory was given more
ammunition by today's market behavior. We are sitting
right under it, and if we break will likely go higher. The
NASDAQ appears poised to rally, with the OEX uncertain. I
would simply watch our short term break lines - 11,075 down
and 11,100 up - for an indication of short and medium term
direction.
Thanks for listening, and good luck in your trading!
Ed Downs
edowns@nirvsys.com
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Definitions:
Short Term vs. Medium Term: The short term is defined as
1-4 days. Most short term commentary is relevant to day
traders for the following session. The medium term is 1-4
weeks.
Fulcrums: A fulcrum is essentially a "line in the sand" or
"demilitarized zone" in the battle between bulls and bears.
These lines, identified by experience, are equilibrium
points between buyers and sellers, and are usually found in
the centers of consolidations (trading ranges). When price
moves away from a fulcrum, it usually moves quickly and a
great distance.
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LINKS TO CHARTS:
Dow 15 Minute Chart
signalwatch.com
Dow 60 Minute Chart
signalwatch.com
Dow Daily Chart
signalwatch.com
Dow Weekly Chart
signalwatch.com
legend
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