MARKET COMMENTARY

The markets are trading within the boundary of the triangle. Although the Dow drifted lower, it still stayed firm above the uptrend line (solid blue) as shown in the chart. Now, we have a conflicting set of bullish and bearish indicators. On one hand, the price and indicator divergences are seen. It has also developed a rising wedge which is a bearish signal. On the other hand, the mood of the market is actually bullish judging from the way the market behaved so far. It was beaten down yesterday by almost 190 points before pushing back by the bulls to a high of just losing 40 points and finished finally at a loss of 109. This is a rather bullish behavior.

Yes, we are not certain which way it will break out. Even though the crude oil price rebounded, it is not going to prevent the markets to move higher, breaking the inverse relationship between the two. For trading purpose, it is better to hold on to whatever you are doing until there is clear sign shown which can happen anytime now.

What we want to see is a nice breakout on either side, clearing the way for trading decision.

DJIA Daily Chart

Russell is still the most bullish index. We have to see breakout of resistance or the uptrend line to decide on the next course of action.

RUT Daily Chart

The immediate resistance for NDX is around 1990. But the momentum is seemed lacking. Volume has been declining for the fifth straight days now. Just as other indexes, we need confirmation for new direction.

NDX Daily Chart

STOCKS TO WATCH:

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