The Sunny Side of the Street

In Sunday night's commentary I said:

"I expect we will see one more narrow day, testing the lows, and on Tuesday we should see a stronger move upward, as prices push out of the congestion."

I also pointed out that my model was in a short signal, but that I was going to disregard it unless we got serious confirmation that the market was going to move down.  Good thing, because at 7:30amPT my model gave a buy signal.

On Monday morning the Dow began a steady push upward and reached a plateau by 9:15amPT.  I wasn't until the last bar of the day that we officially pushed out of the congestion, but the entire move was upward, without a serious retest of the lows.

Even so, today's action stayed within the channel it has been traversing for weeks--until the last bar of the day.  That lone bar gives me hope for tomorrow.

On the daily chart (Figure 1) you can see that the Dow once again touched the down-sloping trendline without pushing through.  But, the positive note is that it is not falling short of the trendline, it is continuing to push upward along the line.

Again, we have congestion between that trendline and the SDMA midlines, with price getting squished in between the lines.  That speaks to me of a fast move out of the congestion in the near future-- possibly tomorrow.

What we need, to demonstrate the beginning of a market recovery, is for the Dow to move up to the 8648 level and start using that as its pivot.  That would mean that market activity has to break out of the channel in which it is stuck, and successfully trade above the downsloping trendline (Figure 1).  If that doesn't happen pretty soon, then we're going on down!

Figure 2-- QQQ 15-min

The intraday chart of the QQQs in Figure 2 just further demonstrates the channel boundary, as 26.09 successfully stops all upward action one more time!