Increased Volatility

Dow trades at resistance in volatile fashion, gears up for next big move.

The Dow has increased in volatility, as it continues to hang around at resistance at around 10,850, as seen in the 15 and 60 Minute Charts. The index has traded wildly between the boundaries of 10,765 and 10,870, which implies uneasiness heading into tomorrow's market.

The fact that the index cannot breakout from this range to the upside indicates a lack of confidence on the Long side at this time. If this is the case, we may be gearing up for a very big downside break and move in the coming days. A downside push through the bottom of the range at 10,765 will likely indicate that such a move is likely.

Otherwise, look for the index to remain within the boundaries of the range, as it continues to determine its next move. An upside push through 10,870 will indicate sustained strength, especially if the Dow can close above this level tomorrow.

Short Term Dow

Short term, the Dow has formed a consolidation at the highs of the 1 Minute Chart from 10,830 to 10,845, which implies strength at the Open. However, watch for a break either way for short term direction at the outset.

Medium Term Dow

In the medium term, we entered the market Short today at 10,775, but stopped out for a loss. No other trades were triggered, and we are now out of the market. We will watch 10,765 down, and 10,875 up tomorrow; using 20 point stops.

NASDAQ & S&P

The NASDAQ led the general market lower today; while the S&P traded in a highly volatile manner. Watch the clear range formed in the S&P and the trend line formed in the NASDAQ tomorrow.

Summary

The Dow continues to hang around at resistance at 10,850, but is increasing in volatility, which usually implies weakness in the near term. However, the fact that the index is holding at the highs gives us a bit of confidence. Watch this range closely tomorrow for a break to determine the next major move.

Thanks for listening, and Good luck in your trading!

Ed Downs
edowns@nirvsys.com

with assistance from..
Frank Ochoa, Sr. Market Analyst
fochoa@nirvsys.com

** Note: We are now posting Index entries and exits in Real Time, through our new Intraday Index Alerts service. To learn more about the service, visit SignalWatch.com and select Intraday Alerts from the main navigation bar. - SW Team