Updated Monday, 9/10 for Tuesday's Market
Key DOW Levels for 9/11
UP Above 9,700
DN Below 9,500
Consolidation Day
Dow performs a 'Drop and Pop', then consolidates. Other
indexes appear to show bottom formations.
>From yesterday's commentary, "...In the Medium Term, we
are still Short on the move below 9,875 giving us about 275
points of paper profit. I am going to tighten stops down
again to 9,675 to lock in 200, because I am expecting an
upside move (I may be wrong, but that is how it looks to me
for the reasons noted above). If we rally through this
level, I don't think we are going to see a 'tanking' market
on the flip side..."
Today was a very interesting day. In the 15 Minute Chart,
you can see the obvious "Drop and Pop" in the first 30
minutes, leading to a rally all the way up to - get this -
9,671. We turned back down to consolidate at the 9,600
level. Based on the 30 Minute Rule and our Higher High
rule, we did not go Short, but rather stood aside all day,
watching the market spring back and forth in the 9,500 to
9,675 range.
This would be a 'ho hum' event, except for the fact that we
formed upside saucer patterns on the NASDAQ and OEX. We
have been speculating that there is probably a bottom on
the high tech index, and now all three indexes appear to be
posturing for an upside break, which is the way I would bet
for tomorrow (sticking my neck out a bit).
Since we are, technically, consolidating at the lows, there
is the chance for a failure at 9,500. I stand by my
analysis from Friday, with the adjustment for today's low.
Watch 9,700 for a solid break indication up, and 9,500
down. In between this range, expect some turmoil. If we
open strong, and cross 9,675 I would start going Long
there, holding stops at 9,650.
Short Term Dow
In the Short Term, we want to watch the tight range from
9,560 to 9,625. This range is an expanding triangle in the
5 Minute Chart - an unstable formation. I'd use 9,600 as
my "fulcrum" - Long above and Short below. If we drop
hard, we are VERY likely going to 9,500 where a bottom
should form. If we break 9,675 right away, I'd expect
today's high to quickly be taken out.
Medium Term Dow
In the Medium Term, we are still Short on the move below
9,875 giving us about 275 points of paper profit. We came
very close to getting stopped out today at our 9,675 stop
level (hitting 9,671 intraday) and so are still Short. I
am going to tighten our stop down one more notch, to 9,625
which will lock in 250 points of profit on our Short trade.
The reason for this is, I think the market is going to
rally tomorrow.
Again, my goal on this page is not to "predict" the market.
I don't think anybody can do that with any degree of
certainty. But, in this case, with evidence of strength on
the NASDAQ and OEX, both at historical lows, I think it is
prudent to lock our large Short profit. At the same time,
I would not go Long unless 9,700 is crossed with force.
So, 9,625 - cover Short, 9,700 - go Long with stops at
9,675 (use 9,700 as a "fulcrum" on the Long side, which may
mean a re-entry on a whipsaw. Use the Higher High Rule, as
defined below).
NASDAQ Composite and OEX (S&P 100)
The NASDAQ formed a saucer in the 15 Minute Chart, but also
shows us an expanding triangle, along with the OEX. So, we
will be watching for instability at the Open on these
indexes, with the expectation of a rally developing some
time tomorrow. At the same time, we are keeping our eye on
the lows for signs of failure. *
Summary
We are still Short, and now tightening our Stops down to a
point where we will almost assuredly be taken out tomorrow
for a very nice 250 point gain from our entry. I am
expecting an up market, and for the page, we will go Long
at 9,700 with stops at 9,675. How far could such a rally
go? Difficult to tell. I think the event will hold for
several days at least, giving us time to establish exit
points and targets. If we do NOT rally, and fall through
9,500 instead, I am expecting the market to trade to 9,400
as 'the' low, based on our target in the Daily Chart.
Thanks for listening, and good luck in your trading!
Ed Downs |
