Key DOW Levels for 12/29
UP Through 10,900
DN Through 10,850
Ready to Retrace...
Moving stops up to 10,850, locking in 350 Dow points.
Retracement very likely now.
From yesterday's commentary, "... 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....."
Fascinating. Another up day. Look at the trendline in the
15 Minute and particularly the 60 Minute Charts. Straight
and Long. This line will VERY likely be broken tomorrow,
which is why I have pushed our stop up so tight, to 10,850.
This is just 24 points below the Close. Why so tight? We
have made 350 Dow points from our entry, and the market is
ready to give some back in the first significant
retracement. Now, it might just keep on going, but I doubt
it. That's not how the game is played.
All markets retrace eventually. You can see that this move
is much longer than any previous straight-line move, and
besides that, we are at resistance of 10,900, as evidenced
in the 60 Minute Chart. It should happen.
Short Term Dow
Today was another slow mover, but I am expecting some quick
action tomorrow. Note the long trendline we have drawn,
crossing the line at our exit of 10,850 for the medium
term. In the short term I would use this line as well,
expecting any push through to carry the index back to
10,800 or 10,750. Then, we will watch for the reversal.
Again, we could just blast off again. In that case, buy
any breaks of 10,900 that hold.
Medium Term Dow
You will note that I have added a new entry point at
10,900. I would not enter if we break 10,900 at the Open.
You want to make sure we are above it and holding, and then
exit if we fall back through our stop at 10,850. This
market has a lot of gas, and it could just power right no
through. I really doubt that will happen, though, as
10,900 is a fairly significant resistance level. My
expectation is for a consolidation from 10,700 to 10,900
for a week or so, and then an ultimate break of 10,900 for
the ride to 11,250.
As always, don't go by what I "think" will happen. Go by
the levels. Long above 10,900 and out at 10,850. We will
not short this market until we see considerable evidence of
a new decline setting in, which is unlikely at this point.
NASDAQ & OEX
The NASDAQ and OEX are continuing to slowly move higher,
and we still have our triangle pattern on the former, with
a clear breakout potential to the upside at 2,550. We did
cross this level today, and closed just above it, and the
basic chart pattern says this level will be broken in the
next few days. Our stop is at the base of the intraday
consolidation, at 2,500. **
The OEX is forming an amazingly bullish consolidation
pattern in the 15 Minute Chart, and I am watching it
carefully. Our levels there are 693 up and 688 down. ** A
break of the latter to the downside would spell a pretty
hefty correction in the rally, so we will exit quickly if
it is crossed.
In Summary:
This has been a fun rally so far, with clear entry points,
and nice stop opportunities on the way up. Now, we are
looking for reasons for it to retrace. The Dow is at the
end of a long run, in my opinion, and needs to take a
break. I do expect the general consolidation in the Daily
Chart to lead to a move up to 11,250. But for now, we
should pull back in preparation of the final break of
10,900. We will see. Our basic stops are at 10,850 (down)
and 10,900 (up) - with tight stops at 10,900 on new Longs.
Thanks for listening, and good luck in your trading!
Ed Downs |
