Dow Jones Ind. Ave. and S&P 500 Test Equal Move Targets at Lows

Dow Jones Ind. Ave. and S&P 500 Test Equal Move Targets at Lows

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Hey gang! First off, I want to thank completely of you that made it out to my presentation on Monday evening in New York! It was quite a turn out! I'll be sending out a copy of the power point for the class this week, so keep an eye out for it!The market finally got past its afternoon sluggishness this week. In fact, the swings throughout the session over the past several days have been extremely nice for daytraders. The 5 minute moves have been smooth and without a great deal of chop on either the up or downside. Monday kicked off with a gap up, but selling hit suddenly out of the open and a strong downtrend took hold. This trend continued throughout the session and took the indices into the upper end of the daily target zone we had been following over the past several weeks. This amounted to an equal move zone hitting on the daily time frame in the S&P 500 and Dow Jones Industrial Average.

On Tuesday the markets rebounded with the strongest gains in over a month. The S&Ps had tested the November lows the day before and this served as a strong technical support level which fueled speculation of a low being established. We are still ahead of the typical reversal duration in the markets though, so I wouldn't mind just one more minor test of lows, into perhaps the 7000 level on the Dow. March tends to be a much stronger month for market reversals, as well as breakouts from trading ranges.

The Dow Jones Industrial Average ($DJI) ended lower by 80.05 points, or 1.1%, at 7,270.89 on Wednesday. The index's down 16.2% so far this year. The early morning losses on Wednesday were extended by poor housing data in which the National Association of Realtors reported that existing home sales fell 5.3% in January. This was a much stronger decline than had been anticipated and prices fell near 6 year lows. The S&P 500 ($SPX) fell 8.24 points, or 1.1%, and closed at 764.90. The Nasdaq Composite ($COMPX) lost 16.40 points, or 1.1%, on Friday. It closed at 1,425.43.

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