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Daily Market Commentary



Tuesday, August 07, 2007


 

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Trading Education Tutorial

The Big W

Double Bottoms provide visual reference points that map the entire reversal process. Once located, these signposts identify most key price pivots and flash early warning signals when violated. The most common of these, The Big W, begins at the last major high printed by a downtrending stock, just prior to the first bottom. The first bounce after this low creates the center of the W as it retraces between 38% and 62% of that last downward move.

This rally fades and price descends back toward a test of the last bottom low. At this moment the trader listens closely for the first bell to ring. A wide range reversal bar (doji or hammer) may appear close to the low price of the last bottom. Or volume spikes sharply but price does not fail. Better yet, a Turtle Reversal develops where price violates the last low by a few ticks and then prints a sharp move back above support. Should any or all of these events occur, we mark the potential second leg on our Big W
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Trading Education Tutorial
Courtesy of Nirvana Systems

Triangles





Tightening Price Action Leads to a Breakout

There are various forms of consolidation and they occur anytime there is an equilibrium of buyers and sellers. One of the most predictive consolidation formations is the triangle.


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NASDAQ Chart of the Day
Courtesy of Nirvana Systems


JCOM got a lot of buying interest back at prior support at 32.00 once again. If this bounce turns out to be a higher low within the highly bullish uptrend, we could see new highs soon.


Daily Trading Signals

 


NYSE Chart of the Day
Courtesy of Nirvana Systems


LNT has found buyers once again at key support at 35.20, which has held firmly since last Fall. If the stock can remain above this support level, we could see another rise back toward the 45.00 range.


Daily Trading Signals

 


Daily Market Commentary
Courtesy of Nirvana Systems

Updated Monday, 8/6 for Tuesday's market.

Key DOW Levels for 8/7

UP

Above 13,525

DN

Below 13,150


Steady Reversal...

- Dowreverses from 13,200 support, rallies back toward key resistance with 287 point gain. The index rallied back to within 22 points of the key 13,500 resistance level, which has been quite a 'line in the sand' lately. Watch this zone tomorrow.


- The NASDAQ and S&P each rallied steadily alongside the Dow today, but now have to battle the major upper trend lines that have paced the overall declines. Watch these lines closely for signs of another reversal or a potential new trend.


Summary

The Dow closed the day at the highs of the session and is now holding at the top of the large consolidation range. Watch this range for an eventual breakout, as this pattern could easily spark heavy market participation.


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