Archive for Dow Jones Industrial Average
Unlike NQ, Dow refused to even consolidate below Y+1. Instead it popped higher and sit above Y+1. Eventually that led to the upside breakout and doubled the range of the week and paused. Closed the week above Y+1 and midpoint.
The thin upchannel was broken by end of the week yet there was no negative reaction. This could be caused by option expiration.
Once B-1 is breached, I am looking for at least a drop to below B-3 to fill the gap below.
As long as it holds, it is difficult to tell if Dow still has enough fuel for another push higher.
As mentioned last week, following the Non-Farm Payroll week bias worked out great. Dow bottomed out on Monday and not even pullback to Y-0. Then exploded to the upside and we got Y+2 before NFP Friday. Friday sold off in the morning but the drop was short lived. Closed the week near week high and Y+2.
The 2 trading days following NFP are usually weak, especially after such strong weekly close. It is reasonable to expect consolidation below B+1 and even a pullback to Y-0 is possible this week.
Got Y+1 target right from the start. Then failed to stay above Y+1 and induced a flush back down to fill the gap and tag Y-0. The flush continued and took out Y-1 in 1 go. Then magically bids came in and defended Dow. A huge 1-2-3 was formed and that led to a short squeeze pushing Dow way higher. But the move could not sustain itself and collapsed back to Y-0. Closed the week above Y+1 and midpoint.
The week before last was wild. Last week was worse. Things just change within a day or 2. Both sides failed to secure Dow in a trend.
Daytrading becomes much easily in environment like this because of the expansion in daily range.
Swing trading will continue to be difficult until Dow finally form a swing top or bottom.
Next week is NFP week so follow the playbook.
Right from the start of the week Dow moved higher but struggled to stay above Y+1. The spike high that led to a close well below Y-1 confirmed the FBO and staged Y-1 as the target. Dow flushed down to Y-1 and gap thru to Y-2 before it finds support. To the surprise of many people, Dow rallied all the way back up to close the week positively. Closed the week above Y-0 and midpoint.
First a FBO to the upside leading to a selloff to the bottom of the breakout range. Then holding the bottom of the breakout range and rallied back upto above Y-0. That means both boundaries of the tight range are rejected.
There is no guarantee that next breakout will be for real. So far bulls have the upper hand because the lower boundary was not breached to form the bottom.
B+1 in play as long as B-0 holds.
Option expiration last week. False breakout on first push against Y+1, gave us a go for the Y-0 play. Pullback to Y-0 overnight midweek and bounced back since. Retest of Y+1 later in the week resulted in strong selloff again. This time it dropped below Y-0 but still manage to bounce off fiercely. Closed the week above midpoint and below Y+1.
As mentioned last week as long as Dow is trapped in the Y+1 / Y-1 range, there is no direction. So last week joyrides to Y+1 and Y-0 following the crowd was easy. The op ex Friday close, however, was very disturbing as we have not have such wild move on op ex for a long time.
In a way, Dow experienced continuous attempts to push it lower for weeks now yet the price level resolved higher. It is a sign of strength. In another words, Dow has neutralized the overbought condition from late January by going nuts with 2 ways 150+ points swings around 13900.
At this point it is in breakout mode on weekly timeframe. Daily chart signals will have no meaning once the breakout in weekly happens. Be aware of that.
Right from the start of the week, the up trend was almost broken by the gap down. Dow magically holding the important swing low I mentioned last week and then rallied from there. Rest of the week is just pure struggle within Y-1 and Y+1. Closed the week above midpoint.
It is rare that Dow can hold a price level so precisely for so many times in a row within 2 weeks.
It was also outside week last week, yet Dow failed to close outside of the Y-1 / Y+1 range. So the struggle continues.
Until Dow is willing to move out of this range, it will continue its erratic move.
Daytrade mode until I see Dow giving me a solid reason to do a swing play.
What normal? Another continuous drift higher until round number 13900 was tagged. Led to the usual 100 points pullback. Then extreme reaction to the level with a gap up and go to tag Dow cash 14000 level first time in many years.
Dow indeed having a tight range week after the strong breakout move the week before last. The unusal gap not fill scenario is again a repeat of what happened last year. It is no longer a surprise.
Looking for a short term top to be formed soon. This week produced an important swing low that we now finally can use to definite the up trend. Breaking of the up trendline from here will give us the signal for a more significant pullback.
As long as that has not happened yet, Dow will continue with its up drift behaviour.
Rallied above Y+1 right after the holiday weekend. Gapped to Y+2 and force another pop higher to Y+3 before Dow stalled. That 2nd pop is in the backdrop of Apple sold off more than 10% that morning. The pullback failed to even close the gap it started from and drifted higher since. Closed the week near week high and above Y+3.
Exact repeat of what happened last year so far. My speculation last week that should a sell off of any kind that take down Dow by 100 points, we will see all out effort to reverse it. Well, Apple dropping 10% definitely fits the bill of endangering the US stock market stability. I guess it is enough to trigger PPT doing their job.
Next week is end of month for the first month of the year. It is in general more bullish than the other months. The catch is that Dow has already jumped 600 points in 3 short weeks. A mild pullback / consolidation back down to B-1 is normal too.
3rd week in a row the major US indices are repeating what happened last year. The rising wedge broken early in the week and turning into sideway action around Y+1 which is usually bullish as the trend entering the consolidation was up. Then another gap up and go leading to all out short squeeze to above Y+2. Closed the week above Y+2 and near week high.
100% absolute range expansion capped the up swing so far. As long as B+1 acts as resistance, good chance that Y+1 will be retested sometime this week.
I will not be surprised that all efforts will be made, including use of newshocks, rumors, etc. to pop Dow higher should we get a day that drops it by 100 points or more.
Sold off in the beginning of the week, yet the gap from last year acted as strong support. Sellers forced to give up. Rising wedge all week since. Closed the week near week high and above Y+1.
2nd week in a row move in rising wedge formation. The 2 combined together is now a even bigger rising wedge formation in the making.
As posted here, we are seeing a repeat of the price action of 2012 1st 2 weeks.
Would Dow simply starts an all out rally again?
Price pattern is bearish, breadth is overbought by aprox. 400 pts. My take is that we will not get a repeat of last year.
The key event that will invalidate the bearish bias is for Dow to zoom above 2012 year high and stay above on weekly close basis for another leg pushing up.
Playing the bearish side from here means you need a huge stop against this potential FBO on yearly boundary. Not something suitable for everyone.