Teach Talk Trade Day Trading & Technical Analysis

DOW Directions 02-29-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow trips, falls and begins to bleed.

Thursday’s turned negative and we anticipate further downward drift. Negative technical clues hint tough sledding ahead.

The daily StoRSI, our momentum oscillator, has turned down at its upper trigger level. Typically, the StoRSI draws large sine curves that trace from top to bottom of its range. After reaching the upper trigger levels of the momentum oscillator, momentum has waned and now is gathering steam to the downside. This usually means the market will find it difficult to rally.  As long as the StoRSI continues its downward travels, the market will have difficulty rallying.

The T8, our moving average that defines trend, continues to point in a slightly upward direction. Without a strong angle pointing up or down… identifying a trend can be a very tricky proposition.

Thursday’s candlestick was not significant. What is significant is the wicks, above the candle bodies, posted on Tuesday and Wednesday. Markets tend to move against large wicks. The wicks should now become a resistance area.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

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