Donald: Well, thanks as usual for the post. Well, I am tracking the rising wedge and today I actually added the pitchfork...<g>
I did not get my daily update for yesterday accomplished until just before the Markets opened today. Not enough time to do my usual analysis.
Well, as expected the IND (Dow Industrials Theoretical Data) move down into the lower half of its long term trading envelope has resulted in an additional bearish pattern formation. Looking at the IND Daily Semi-Log Chart one can a note a bearish flag formation. This is a rising consolidation pattern. The IND/DJI found significant support at the lower edge of its long term trading envelope and its 50 day SMA.
For you intraday traders look at the DJI (Dow Industrials Actual Data) 30 Minute Interval Semi-Log Chart to see the bearish flag formation. To view the upper ascending trend line, connect the highs of 1/19 & 1/20 and extend to the right. To view the lower ascending trend line, connect the lows of 1/14 & 1/19 and extend to the right. The normal break of this formation is lower. If the lower trend line is penetrated significantly, next support will be found in the area of 9275/25 (strong price action), and 9200/9160 (minor price action), 9125 50 Day SMA (strong) and 9100 (strong price action).
If the formation is negated with a significant move above the upper ascending trend line, next resistance will be in the area of 9600 (strong price action).
The TRAN (Dow Transports) have been leading the way for the DJI. It is showing more weakness and closed once again below its 200 day SMA. I suspect the TRAN may well work its way down to test support at the 50 day SMA over the next day or three.
The COMPX (NASDAQ Composite) as has been the case since the Oct 8 low is showing much more strength than the DJI and has lead the bull charge. However, this divergence between the COMPX and DJI will not last, it will resolve.
Which one will rule?
Conclusion
Looking at the Market as measure by the DJI, Daily Semi-Log Chart: The rising wedge described by Donald Sew is bearish. Contained with in this rising wedge are two additional formations. A H&S formation in the process of completing the second shoulder and a bearish flag formation which will me instrumental in completing the second shoulder.
If the bearish flag is negated, more than likely that will negate the H&S formation as well. The only remaining formation will be the rising wedge.
If the bearish flag resolves as expected, I expect the DJI will continue its drop finding support in the area of its 200 day SMA. From there it should base and rally short-term.
Note: Chart patterns are not 100% Keep an eye on the bearish flag's trend lines Thursday. I always feel a little uncomfortable when using H&S patterns, as they are the least reliable I use.
In addition, my technicals are still pointing down at least short-term.
(All Disclaimers Apply)
BWDIK
Regards,
LG |
