Updated 2/28 for Friday's market.
Key DOW Levels for 3/1
UP Above 10,175
DN Below 10,050
Still in the Range
The Dow stays within expanding range. Watch 10,050 down, and 10,175 up.
From yesterday's commentary, "...If we look at this pattern [expanding triangle], we see that it stretches from 10,050 to 10,250. The lower boundary of this range is prominent, and the Dow could continue to trade within this range for a few sessions before the breakout occurs..."
Indeed, the Dow continued to trade within the boundaries of 10,250 and 10,050 today, but looks poised for a break tomorrow, for various reasons which we will expound on.
The 60 Minute Chart reveals an upward-sloping channel that the Dow is currently trading within. The Dow has formed a 7-day uptrend and is currently at the lower boundary of this channel as of today's close. We will want to watch the boundary at 10,050 closely tomorrow for a break, which would likely result in a significant down move.
On the flip side, the 15 Minute Chart gives us a reasonable case for an upside break tomorrow. In this timeframe, the Dow has formed a downward-sloping consolidation. And, as we know, downward-sloping patterns typically break to the upside.
Finally, the consolidation is still intact in the 15 Minute Chart. Consolidations at highs are generally bullish patterns.
What to make of all this? The odds favor a rally, based on patterns formed on the consolidation and the patterns on the other indexes. We are fairly confident there will be a breakout; whichever level is crossed (10,050 down or 10,175 up) should be used for confirmation. Also, remember that Fridays are usually up. [Harry: Since when???]
Short Term Dow
Short term, the Dow held above 10,100 the entire day, but closed the day just above this level. Use this level as a fulcrum for Friday's Open. That is, if we are above 10,100 thirty minutes into the session, you should be Long. Below it, you should be Short, with stops at the same level.
Medium Term Dow
In the medium term, we are still on the sidelines waiting for a reasonable entry opportunity. We will enter Short below 10,050 for a confirmed downside break. However, early Shorts can be taken below 10,100 if you can watch the market during the day. We will go Long above 10,175, with stops at the same level.
NASDAQ & OEX (SP 100)
The NASDAQ has formed a downward-sloping triangle consolidation with a well-formed upper trend line, which begs for an upside brak. We will watch for an upside break tomorrow. The OEX continues to trade within a wide trading range. Watch the boundaries tomorrow. *
Summary
The Dow continued to trade within the expanding triangle trading range today, and is sitting on the lower boundary of an uptrend. The index has formed a consolidation at the high, therefore we feel odds are highest for an upside move tomorrow, unless the lower boundary is broken. In the final analysis, you have to watch 10,050 down, and 10,175 up closely, and trade the break.
Thanks for listening, and Good luck in your trading..
Ed Downs
edowns@nirvsys.com
signalwatch.com |
