The Dow futures plunged 994 points, to a low of 9840, before a short-covering rebound. The April 27th and May 3rd reversal dates identified the major highs that formed the bearish TR pattern in the Dow Jones futures that signaled the trend shift and triggered the sell.Â Â However, todayâ€™s wide range day has skewed the cycle and it will need a few days to form a new signal pattern.
June Dow Jones â€“ Dow Jones futures traded above 11,000 for the first time since September of 2008, after Greece was offered a $61 billion rescue package. The Dow Jones posted the third higher close after finding support at the up-sloping median line and 20-day SMA. Â The long-term upward trend remains intact with a target objective at 11,286, the .618% Fib retracement of the major downward swing that occurred between October 2007 and March 2009.
After confriming the bullish TC (trend continuation) pattern on March 2nd, the Dow Jones futures stalled at the prior pivot level and even backed up to test support at the lower parallel line. However, the bullish cycle held and propelled the Dow Jones futures past the previous high with good seperation. This keeps the bullish cycle intact with the next target objective at 10,687. To learn more above how to apply the action/reaction method to you trading check out â€œUnlocking Wealth, Secret to Market Timingâ€ or check out the youtube video at http://www.youtube.com/Tradersnetworkinc
In last night's TMV Swing Trade report for 1/15/10, I said - "Dow Jones futures advanced into the January 14th reversal swing day in spite of the U.S. Commerce Department report that retail sales were down .3% in December. This was weaker than expected. They also said that inventories were up .4% in November, more than expected. The upward trend remains intact, but the Dow Jones is trading the weak side (below) the ascending median low; at the same time, it is testing the sloping reaction line target objective. The short-term cycle is near completion and the market is due for a correction. A trade below Thursdayâ€™s low of 10604 will end the cycle and trigger a sell signal.Â Sell the Dow Jones at 10599 stop, with a stop loss above the swing high." The 1/15/10 trading session open steady to slightly higher before tumbling below the prior day's low and trading to a daily low of 10508.
March Treasury bonds reached the downside reaction line target objective on the reversal swing date.Â From the support, T-bonds bounced, but then retested and traded to a new low on December 31. The market has been unable to find any new selling so the weak shorts are moving to the sidelines. This price action is forming a possible peg-leg bottom that could portend a rally to the median line or 20-day SMA.Â I will have a new recommendation and update in today's TMV Swing Trade report.
From the TMV Swing Trade Report (12/21/09) The Treasury yield curve, a barometer of the health of the U.S. economy, widened to a record high, as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt. Chart wise, T-Bonds confirmed a bearish swing pattern, with a close below the descending median line. This portends a price swing towards the lower parallel line as the market approaches the December 29th. Â The T-Bonds sell was triggered at 116-30 with the stop loss at 117-25.
March Treasury bonds closed below the downward sloping median line on Friday, December 11. The market rebounded slightly on Monday's projected reversal swing date, but the rebound was cut short by the median line and closed as an "inside day".Â An "inside day" on the projected reversal swing date is typically considered a continuation pattern and suggests the T-Bonds should continue the downward trend toward the lower parallel action line.
Currently short from 10360 â€“ last price @ 10378 - December Dow Jones futures reached a new yearly high on the projected reversal swing date December 2. Â On Thursdayâ€™s â€œtrail dayâ€, the Dow Jones reached the new high and reversed just below the descending reaction line target objective
. The Dow Jones futures ended the session as an â€œoutside dayâ€ with a lower close. This is a negative pattern and could mark the beginning of a significant correction. Â Â Hold the short position, with the stop loss at 10442.
Tuesday, December 2nd, was projected a potential reversal swing date two earlier.At the same time, a sloping reaction line target objective as drawn on the chart, suggesting a resistance at 1119.50 The ES did reach a new high on the 12/2 reversal swing day, but it was the "trail day" directional indicator that suggested the next direction for the ES was down. The market reacted to the Unemployment report with a rally to 119.00, but reversed and is currently trading at 1101.00. A negative close today will do a lot of damage to the chart and could trigger an longer-term move lower.
The Dow Jones futures reacted to the Unemployment reportÂ with a rally to a new high of 10509. However, the rally was short-lived when the Dow Jones futures reversed and tumbled to a new daily low, giving back over 200 points in less than two hours. The new high had reached the sloping reaction line resistance line during the predicted reversal time frame. This is a great example of time and price alignment!