STOLEN STUFF:
From: OVETUS Friday, Dec 15, 2000 6:59 AM ET
Reply # of 35917
Love from Spain:Updated Thursday, 12/14 for Friday's Market
Key DOW Levels for 12/15
UP Through 10,750
DN Through 10,650
Non-Confirmation
Buy the rumor, sell the news - a tenet that held up today.
From yesterday's email post: "...I really think we are in
for some great action now that the election has been
settled. Will it be "up"? Most likely. But actually, it
doesn't matter. If we start down tomorrow, you should get
Short. That will mean the market doesn't care about the
outcome of the election, but rather is focused on
earnings... The 2,850 level is at an important trendline
in the 60 Minute Chart - and it was violated today. So,
"technically" the market should now drop further...."
Well, I'd say the market voted today, wouldn't you? No
recount was required - it started down and kept going down,
all the way to the close, across the board. We dropped
right through our stop/go short levels on the NASDAQ and
OEX, and moved to within striking distance of our lower Dow
critical support level of 10,600.
For short term traders, today was great. The immediate
drop at the Open heralded a down day, after yesterday's
election conclusion failed to garner confidence. There was
a great deal to be made at the outset. Then, we formed a
consolidation from 10,650 to 10,775.
Take a look at the 15 and 60 Minute Charts. You can see
this formation, just above 10,600. What does an
upward-sloping consolidation like this usually mean?
Typically, it says "we're going lower, folks." The center
of the consolidation is about about 10,675 and the high is
at 10,850 - so the projected target is something like
10,450. However, 10,600 is an important support level.
So, we will be watching for a drop through the current
support level, or a bounce.
Short Term Dow
The short term implies a strong drop through 10,660 at the
Open (by virtue of the consolidation I have marked in the
15 Minute Chart). If we get that drop, you should go with
it and set your stop at 10,675, holding on until we reach
the 10,450 zone. On the upside, you want to go Long at
10,700 (the center of the small consolidation) and hold
your stop at the same value.
Medium Term Dow
In the medium term, we are a bit stuck here. We are still
Long, with our stop at 10,600. With the formation in the
Dow today, I would say our odds are fairly high of pushing
down through, and I would consider exiting and going
Short at 10,600 and hold on for the ride. Clearly, the
market is weak and we must work in the direction it is
pointing, even though "logically" we should be seeing a
December rally. To the upside, I would say the "line in
the sand" is at about 10,750.
NASDAQ & OEX
The NASDAQ was the big vote-caster today in the market's
direction election. We saw a continued slide, forming a
very clear upper trendline in the 15 and 60 Minute Charts.
** We will be watching these lines eagerly for breaks to
the upside, because the index is now short term oversold.
We are also watching our lower critical support level at
2700. The OEX dropped through 720, pushing down to 710.
This is also a critical support level, so we want to watch
for breaks or bounces there as well.
In Summary:
Our downside scenario is playing out, which means the
fanfare over the election is likely to have fizzled. Now,
we are nursing a falling market - watching for signs of
support but going with the flow as it drops. We are
currently Long the Dow (with our stop at 10,600) and short
the NASDAQ (at 2,850) and the OEX (at 720). We have
reasonable profits in the latter two, with today's action.
As far as the Dow goes, we will have to see. The chart is
starting to worry me. If we drop through 10,650 we are
very likely to see 10,450 over the next week. And then?
We might have to revive the diamond again (we have a large
diamond formation in the Weekly Chart. If we drop through
10,000 a further move of several thousand points down could
result.) We will keep an eye on it. Logically, we should
be seeing the market rally here. But, if it isn't going to,
we can still make money going with the flow..
Thanks for listening, and Good Luck in your Trading!
Ed Downs
P.S. Our daily posting process should back on track
tomorrow. Thanks again for your patience.. Ed
Thanks for listening, and good luck in your trading!
Ed Downs
edowns@nirvsys.com
----------------
* Short term vs. medium term. We define short term as 1-4
days, and medium term as 1-4 weeks. This column is designed
for both types of trading/ investing.
** We are now publishing charts on the NASDAQ and OEX (SP
100 index) in our Premium SignalWatch section, with short
and long term assessments, similar to this page. Click
"Subscribe" at www.signalwatch.com for more details.
*** Our software, OmniTrader, includes market commentary
and individual candidates posted each day. To find out more
about OmniTrader, visit www.omnitrader.com.
----------
"What to Trade?"
I received a very nice email from Mr. Walsh asking what
symbol to trade to mirror the movements we discuss on this
page. What I would suggest is, that you look for
individual issues which are poised to gain the most from a
break of one of our levels. I know this is a bit more
work, but you will often get a nice "spring" effect and
also reduce your risk.
As an example, the weekend of October 28, we speculated
that a rally was likely in store on the NASDAQ, and
mentioned MUEI. It jumped off the launch pad Tuesday, and
has been carried up by the initial momentum.
You can certainly trade the indexes directly (DIA, QQQ,
etc.) but I think your results will be better if you focus
on the issues which will move the most on any given
incentive. Good question - thank you, Mr. Walsh.
Thanks.. Ed Downs
---------------
LINKS TO CHARTS:
15 Minute Chart (NEW!)
signalwatch.com.
60 Minute Chart
signalwatch.com.
Daily Chart
signalwatch.com.
Weekly Chart
signalwatch.com.
chart legend
signalwatch.com. |
