Trading stocks education - Trading tactics & examples

Updated Wednesday, 4/2 for Thursday's market.

Holding..

Dow pulls back from 12,700, closes lower by 45 points.

From prior commentary, "...The Dow closed the day at the highs of the session, but remains at the top of the large trading range, which means the index has yet to get a convincing breakout from this range. Watch 12,700 for clear signs of strength..."

The Dow opened the day with early strength this morning and pushed up to 12,700 before falling to the lows of the session, as seen in the 15 Minute Chart. The index closed the day about 100 points off the 12,700 level with a loss of 45 points, but remains near overall highs after yesterday's big rally.

The Daily and 60 Minute Charts show the Dow continues to hold at the top of the large trading range at 12,600. As we mentioned before, this zone has been tested many times over the last three months, with the 12,800 level being the main fulcrum. Every time the Dow has managed to rally to these levels it has been met with heavy selling pressure. While yesterday's rally was a huge move, the Dow remains within the overall range and below 12,800, which is not a bullish case at this point.

We will need the Dow to clearly break through 12,800 if any meaningful strength is to be seen. Watch 12,700 for early bullish momentum. Otherwise, further sideways movement may be seen at highs above 12,500 before a break or reversal is seen.

Short Term Dow

The Dow closed the day at 12,600, as this seems to be the clear intraday fulcrum in the 5 Minute Chart. Watch this zone for early directional bias tomorrow morning.

Medium Term Dow

In the medium term, we are still out of the market and will watch 12,750 up; using 25 point stops. We will remain on the sideline for Shorts.

NASDAQ & S&P

The NASDAQ and S&P each pulled back modestly after yesterday's rally. Look for signs of a potential continuation pattern tomorrow.

Summary

The Dow closed the day near the overall highs of yesterday's rally, which indicates that bullish momentum remains. However, if the Dow cannot break through 12,800, another sharp drop will be seen back to the 11,800 level.

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