Thursday, November 06, 2014

Dow Pushes Well Past Breakout Support

Another day of gains for markets, but it was the Dow which is best positioned to benefit. The Dow is out of range of the easy short with an undercut of breakout support: one day of loss might not be enough to see this level tested, given net bullish technicals and a MACD at a new high.


The Nasdaq 100 is trading a sideways pattern, holding breakout support, but vulnerable to a 'bull trap' if there is one good day of selling. However, the narrow handle offers a swing trade opportunity on a break of the 5-day high/low.


The Russell 2000 is also shaping a 5-day handle, aided by gap support, although unlike the Nasdaq 100 it's not part of a breakout, but instead is shaping a base which may ultimately lead to new highs.


The Nasdaq remains the index most likely to 'bull trap'. A weak open may deliver a shorting opportunity here.


The story for tomorrow isn't much different for today. Shorts should watch for a breakdown in the Nasdaq. Longs can look to the Russell 2000 continuing with its base development. Scalpers can look to the Dow in the direction of the trend. With the Nasdaq 100, trade the break of the 5-day high/low.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. You can read what others are saying about Zignals on Investimonials.com.

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