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Strategies & Market Trends : APMP (formerly APM)
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To: marc chatman who wrote (8531)11/14/1997 2:09:00 AM
From: Rudy  Read Replies (1) of 13456
 
I think the dow closed below 7450 on Wednesday, I think at 7401.
Today it closed back above. So I was curious whether the closeWednesday below 7450 removes it as a support level. And, if so, would the new support be the Wednesday close of 7400, the interday low on Thursday of 7350, or is there no support in this range, and we now look to 7165 below.

Marc,

It's hard to tell exactly where a support/resistance level for an index like DOW. Cause 10-20 points are relatively unimportant. Each 10 point for dow is 0.13%, so unimportant. Wednesday it penetrated 50 points below support. That is 0.65% and it bounced back up very quickly. If it stayed there and penetrated more, it would have confirmed that the support was broken. It was just a test. Usually a support/resistance level can be tested and be momentarily broken. That's why I put my stop/limit orders 1-1.5% beyond those points. Usually fake break outs do not have outstanding volume (participation). When I look at the weekly chart (each bar represents more concentration of the same price level -> 1 bar=5 days) I still see the same support/resistance levels. If it starts making more visits to 7400 and bounce back from there, we can call it a resistance some time later.

I hope I could convey the way I see it. Take care.
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