The strong bounce back up from the Dow Jones has given us yet another BUY SIGNAL, but we have to wait for at least another up day before confirming it. One bullish sign which gives the Dow more chances of swinging back up tomorrow is the fact that we have gotten an inverted hammer formation, which usually indicates a bottom within the trend. Inverted hammer's success rate falls in the middle range of all bar chart patterns, but I'm not sure exactly what is the exact % of success. We also have the possibility of a morning start formation tomorrow with a big move up. The Stochastic also started crossing up over the signal line, but not enough yet to call the BUY SIGNAL (a move up tomorrow would most likely confirm the BUY SIGNAL in regards to the Stochastic). Also the Dow has managed to bounce back up above its 50 day MA for the past two sessions, which strengthens the support level. However seeing it hit too many time consecutively may break it down eventually. Think of it as a strong door that some people are trying to push open. Seeing it fail to being opened shows strengths but also weakens the more it gets hit. The Dow is starting to build some resistance just under 10000. One possibility is starting to see the beginning of a new trend, which is possibly sideways, and this is not necessarily a bad thing. Only positive economic news will continue to drive the market up. One possible scenario is seeing the Dow move up tomorrow and trade sideways for a while between 9700 and 10000, until breaks up or down one way or the other. A move at just over 9950 towards 10000 may be required for a clear BUY CONFIRMATION. As expected and posted yesterday, we were faced with a lot of volatility today, reminding me about what we've seen a lot in 2008. Volatility is good for day traders, but makes things harder to analyze for a swing trader like myself. I think I will continue to wait for the close of the market before giving any BUY or SELL signals, due to such high volatility.
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