Updated Wednesday, 11/7 for Thursday's Market
Key DOW Levels for 11/8
UP Above 9,600
DN Below 9,550
Retracement Pattern
The Dow moves above 9,600 but then turns back through.
Watch support at 9,550 tomorrow.
>From yesterday's commentary, "Per our levels, we are Long
from 9,475 and are still holding this position. Because we
have moved so far, so quickly, we need to give the index a
little room, and therefore will maintain a wider stop at
our entry (9,475)."
The Dow started in an uptrend today, to form a nice
channel. About 2pm we saw some weakness, with the index
breaking the lower boundary of the upward-sloping pattern
and pushing down through support at 9,550. This downside
break, following a lower high, indicates the potential for
more downside action Thursday and Friday.
Yesterday we went Long on the upward push through the
relative high at 9,475 and were holding a wide stop (at our
entry point) to give the index a little breathing room. We
are now about 75 points away from this stop. For Thursday,
I think we should tighten stops and exit if the market is
below 9,550 at the Open (disregard 30 Minute Rule to exit).
Conversely, I think we should buy more if the market can
rally above 9,600. In other words, I think we should
establish an entry band at 9,550 and 9,600.
The pattern in the 15 Minute Chart is very similar to a
head and shoulders, with a lower high formed after the peak
at about 9,700. This gives us good reason to expect a
further pullback. We will enter Short below 9,550,
applying the 30 Minute Rule.
There is reason to be hopeful on the upside. In the 15
Minute Chart you can clearly see the consolidation that
formed from 9,400 to 9,475. This pattern is based on a
relative low of 9,000 and therefore has the potential to
move to an upper consolidation target 9,800. I would wait
for 9,600 to be crossed as confirmation of such a move.
Short Term Dow
Short term, we see a 50% Retracement of the prior move in
the 1 Minute Chart. This implies that we are going to see
a downturn right at the Open. Watch 9,520 down and 9,560
up.
Medium Term Dow
In the Medium Term, we are Long from our entry at 9,475,
holding stops at the same level. I am going to watch to
see if the market can hold the 9,550 level. This is a
fairly important support line in the 15 Minute Chart today.
If we can stay above it, we will probably rally through
the top. If we remain below, there are higher odds of a
failure back to something like 9,400. Long above 9,600 and
Short below 9,550. In between, we will just continue
holding our Long position.
NASDAQ & OEX
The NASDAQ gained ground, rallying through our upper line
at 1,850 but then, forming a similar head and shoulders
pattern. We are watching the lower support boundary
carefully for a failure. The OEX did likewise, rotating
around 575 and turning down. *
Summary
If you look at all three indexes that we track, you can see
the first chink in the armor. We are hovering around the
resistance lines we drew yesterday, slightly above them but
weaker. Even though we have been Long, I have been
watching for a retracement for the last three sessions, and
this could be the start. Below 9,550 and I would expect
the index to give up another 100 to 200 in a modest
retracement. Above 9,600 and we should continue on to
9,800 - a consolidation target on this move.
Thanks for listening, and Good luck in your trading..
Ed Downs
edowns@nirvsys.com
www.signalwatch.com |
