MARKET COMMENTARY

As expected, the market made extended gain on Wednesday following the strong rally on Tuesday. The Dow is facing a challenge to break the peak of last wave of rebound. Personally, I have a mixed feeling about Dow’s Thursday performance. In fact, what results from Thursday’s action is the defining moment for the direction of the market. If the peak is broken, it would mean a temporary pause of any further bearish move. The bearish trend can be halted for now until more development to present itself for the next few weeks ahead. However, if it reverses its current advance on Thursday with a significant decline (over 150 points), then the bearish trend remain intact. What comes next will be one of prolong sideways movement before a possible break of the support. My guess is that the Dow will fluctuate around the closing price yesterday.

The SPX behaves quite the similar way as the Dow. But its more meaningful resistance is much higher at 50-day moving average. Again, the 60% RSI is the key indicator to watch for breakout.

The more interesting index is still the Russell 2000 (RUT). A spinning top is formed on Wednesday. Now, if the index reverses from here, a possible evening star could be developed. Even more interesting is the fact that we may see a double-top formation. This will mean a strong resistance for the Russell. A break of this current level may put the index on a bullish track. Indeed, a moment of truth is on Thursday.

DJIA Daily Chart

Watch the development of the Russell. What kind chart will be having for the next few months will depend on the outcome of the price action on Thursday.

RUT Daily Chart

I am still seeing a trading range for the Nasdaq. Just the same as the Dow and the Russell, Thursday’s performance is key.

NDX Daily Chart

STOCKS TO WATCH:

NIL

Subscribe to the post comments feeds or Leave a trackback