Love from Spain.Updated Monday, 2/26 for Tuesday's Market
Key DOW Levels for 2/27
UP Current Trend
DN Through 10,500
Bullish Formation..
Dow and other indexes form near perfect upside patterns.
Now, we are holding stops behind the moves and watching to
see if the new bullishness holds.
From yesterday's commentary, "...We are expecting a
retracement Monday back to something like 10,375. If we
get it, and if we see a reversal somewhere in that
vicinity, THAT will be the sign ot go Long in the medium
term, with stops at the same low point...."
Higher low! This morning, the Dow retraced a bit to form a
higher low at about 10,420. While this was not as far back
as I thought we might retrace, it was a classic bullish
formation after Friday's sideways movement. As I said before
the weekend, that reversal at a point between 10,300 and
10,500 would be a critical, key signal to go Long.
Now that we are 350 points off our channel low at 10,300,
what do we do now? Well, this was a big move in a short
period of time, and I am expecting a quick retracement on
the Dow tomorrow - but not much, just enough to give the
market repose after a substantial move. As I indicated
Friday, I am not expecting the Dow or other indexes to
quickly take out their highs. Rather, I am expecting a
slow, stair-step process. The whole trick to making money
here, in the medium term, is to set the lower "stair step
levels (or, stops)" wide enough to keep us in for the broad
move, but tight enough to keep us out of trouble. Of
course, the short term is a different story entirely.
Short Term Dow
On Friday, I suggested, "If we start up, through 10,450 -
go Long but hold your mental stops at 10,430." This would
have worked out well today. The reason I used 10,450 is
this was the location of a tight trendline in the 5 Minute
Chart - breaking it, after forming a consolidation would
have to mean an up market. Now, I am expecting a
retracement through a tight line at 10,620. If you are
trading for the very short term, I would look at a 5 Minute
Chart and see if you can draw this line across lows. If
you are holding overnight Longs and we start up, I would
hold unless this level is crossed, expecting the next
retracement before we reach 10,700.
Medium Term Dow
We got our higher low today, and we did cross 10,600 as
well. That is good. Now, we want to manage Long positions
and hold our stops at reasonable levels behind the move.
Looking at the 60 Minute Chart, I can see a good case for a
stop at 10,500 - 150 points away from today's close.
That's fairly wide, but I think we need to give this market
some breathing room until it gets healthier. In summary,
we are now Long from the higher low at 10,420 and holding
stops at 10,500. I would hold off on new longs a bit
longer, unless you can watch during the day. If you do go
Long here, expect to see a pullback as far as 10,500 and
plan on hanging on while it happens.
NASDAQ and OEX
As with the Dow, we got our higher low further up on the
chart than I was expecting - at 2,230 rather than 2,200. We
also saw a major trendline break in the 60 Minute Chart.
Finally, we had a nice break of 2,300 resistance at the end
of the day after forming a fairly solid upside
consolidation pattern. ** All of this says the NASDAQ is
going higher. The OEX behaved similarly, with another 5-7
points to go before reaching a short term consolidation
target, which has retracement potential. The trend line
break on that index was nothing short of awesome today.
In Summary:
We got our retracement, forming higher lows on each index.
You had to be on the ball, because they formed quickly and
the indexes moved on to go much higher in short order.
Now, we are expecting normal sideways-to-up market
behavior. The logical thing to expect Tuesday is a bit
more upside, followed by another retracement. As long as
we stay above Dow 10,500 and NASDAQ 2,250 over the next few
days, we should be good to go to new highs. I'd say we are
cautiously optimistic at this point, with excellent
indication of bottom formations across the entire market.
LINKS TO CHARTS:
Dow 15 Minute Chart
signalwatch.com.
Dow 60 Minute Chart
signalwatch.com.
Dow Daily Chart
signalwatch.com.
Dow Weekly Chart
signalwatch.com.
legend
signalwatch.com. |
