DOW Hits 50% Fib Retracement

Last night on our call we revisited the potential of DOW reaching the 50% tracement level on some more strength. The index hit that area and it acted as resistance intraday. With 4 straight days up to the 50% retracement area, the chance for a pull back is becoming greater.

DOW Daily Chart:

DOW 1 year / Daily Chart

DOW 1 Year Daily Chart:

SPX 1 Year / Daily Chart

Below is a 1 year daily chart of the SPX

SPX 1 Year / Daily Chart:

RUT 2 Year Chart

The RUT found a support bounce near the August lows and is trying to inch it's way back up. The RUT is currently just above the 23.6% fib retracement area while the NDX has already climbed to the 50% area. This price action to me shows the relative weakness of the RUT index. Notice too that the RUT has convincingly broken it's uptrend and continues to show weakness. In order to reach the previous highs in the 855 area it will need to retest the back of the upward trendline as well as break through several horizontal resistance areas. The probabilities favor more sideways movement between 735 and 800 in the near term. I've listed a hypothetical unbalanced Iron Condor to give an example of a trade that would offer a good risk reward and limit downside risk. This trade example is for educational purposes only.


RUT 2 Year Chart:

NDX 2 Year Daily Channel

The NDX once again is showing it's strength and bounced off channel line support. More importantly is that it's cleared and is currently holding above 2050 which had a lot of congestion.

NDX 2 Year Daily Chart (ascending channel still intact)




Below you'll see a 60 Minute Chart that better illustrates the trend break and corresponding "raising window" created by the gap up Wednesday morning.

NDX 30 Day / 60m Chart:

Market Bounces

Earlier this week I posted a 60 Chart of the SPX showing a bullish falling wedge pattern forming. It confirmed a break to the upside this morning and hit our fib target this afternoon.

SPX 60 Minute Chart:

Dow Levels

Below is a 2 Year / Weekly Chart of the DOW showing a support bounce last week at the 12,750 level. This area has both horizontal and trendline support. If the DOW continues to move up next week, 13,500 will be a likely resistance area as it was a previous support level.

DOW Weekly Chart:



The Daily support shows the bounce on Friday more clearly. I've drawn Fibs at Friday's low to show retracement targets. If this market decides to get the Christmas Spirit and incite a Santa Claus rally the DOW could easily retrace to the 50% 13,500 level.

DOW Daily Chart: