SignalWatch-LITE
Updated Wednesday, 12/27 for Thursday's Market
Key DOW Levels for 12/28
UP Through 10,850
DN Through 10,750
Wide Channel Formed
Moving stops up to 10,750 to lock in profits. Be ready for
the retracement, or break of 10,850.
>From yesterday's commentary, "...We are Long from the
break at 10,500 and managing our position. I do not
believe that the stop at 10,600 will be taken out
tomorrow.... Go Long, with stops at 10,600.... My best
guess here is that we are going to consolidate on each of
the indexes in the trading ranges that are forming above
our entry points....."
Nice day today. And, we tacked on another 100 points of
gain with our stop at 10,600. For tonight's commentary, I'd
like to call your attention to the 15 and 60 Minute Charts
(the first two). You can see the solid line coming down
just above our position at 10,800. Now, look at the Daily
Chart. You can see that we have formed a channel, as we
should with a range from approximately 10,300 to 10,800 - a
wide channel indeed.
Since this channel was formed from the low at 9,800 we can
only surmise that we are going to see a rally to the 11,400
zone. Why? Because the center of our consolidation is at
10,600 and 10,600 - 9,800 = 800, and 10,600 + 800 = 11,400.
This is the "way to bet" at this juncture. HOWEVER, since
we have gone up four days in a row and are hitting the line
at 10,800 I am expecting a retracement first.
If we get this retracement, you should exit Longs. Why?
Because there is no reason to risk profits if we pull back
here. You can always get back in, and we will do so on the
next fibonacci retracement or solid break through the top
of the channel.
Short Term Dow
We should pull back at the Open or shortly thereafter. We
may see a run to 10,850 first. It's difficult to say
because the upper line crosses so many bars. In the short
term, we want to Short any move back through 10,750 and buy
any break of 10,850. Set your protective stops at these
same levels, and then look for the first solid trendline
crossing in the 15 Minute Chart the other way. As I say,
my best guess for tomorrow is a Short play, but we could
blast off the launch pad. If so, go with it.
Medium Term Dow
In the medium term we are Long on our crossing of 10,500.
Exiting at 10,750 will give us another 250 points in the
bag, not too shabby. All markets retrace and this one is
no exception. I think we are just about due. Look at that
long line in the 60 Minute Chart and see what you think. It
appears imminent to me. Now, we could just consolidate in
the 10,700 to 10,800 range, and that will be good too. In
that case, we will enter again on a solid break of the
upper boundary.
NASDAQ & OEX
We have been Long the NASDAQ and OEX as well, and formed a
very nice upside triangle consolidation in the NASDAQ
today. ** I am watching the upper boundary at 2,550 for a
break, while holding stops for our run at 2,500. The OEX
is virtually a mirror image of the NASDAQ, but we have a
much stronger lower trendline in the 15 Minute chart there,
so I am watching that line for a break, at apprxoimately
688. **
In Summary:
We are consolidating and rising, a good sign but clearly
the Dow is now overheated and should retrace. If you are
Long in the medium term from our entry at 10,500 you would
do well to take profits on the pullback through 10,750.
Even if you just went Long earlier today, I think it wise
to exit on the retracement, and get back in on the new low
that is formed, which we will be watching for. We could
blast right through the upper line, and if so, need to stay
Long and add positions, holding our mental stops at the
same, 10,750 level. |
