Dow 01/08/01

ChartMan

Legendary member
5,580 46
Good news and bad news on the DOW. The good news is that 500 held, just, at the close.The bad news is it again failed to break 600 after a seemingly solid rally up with higher highs ending in a 4th attempt just below 600. I said yesterday that I thought the day's rise was too much too soon and for most of the afternoon I thought I had got it wrong. The TA told me all along that the rally was in negative divergence and I couldn't understand why the DOW just refused to go down.You can see from the chart, that Velocity, CCI and TCI were all failing to make higher highs to match the value of the DOW. TCI was always in a solid down channel, right from the off...only momentarily breaking the trend for the final test of 600.I left the chat room tea time thinking how could I have got it so wrong? Everything was telling me down, not up.Well, looking later on this evening, I saw the inevitable breakdown of the rally, tanking over a 100 points to 480 with a brief blip up to 530 on the way, to finish the day 6 points or so down at 509.My call yesterday, that the DOW would fall to support at the rising trend line did not quite hold.I suggested a close around the trend line or 50% retrace, and that they would meet during the trading day. As it happened, they met exactly at the end of the day, and the DOW closed 45 point up on that.Had there not been a last minute rally, I guess we would have finished very close to 464 and in fact that's where I thought it was going with just 10 minutes to go.
Interesting to note on the chart the opening triangle on Velocity, resulting in a small breakout to the last attempt at 600. The last two days have established a minor downtrend from the lows at 555 and 550 two days ago, to the last two lows of today.This is worrying. Being an eternal Bull type, I expect the rally from 129 to be continued, especially as the uptrend has not been broken. However, I can visualise today's Candlestick and that says DOWN.
For tomorrow,I suggest the same as yesterday, a test of 62% support at 464 again, but this time it will be more critical. Failure here is confirmation of the end of the uptrend with the next support at 400 or 50% retrace. I see the DOW moving to 400.....
 

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