Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  

  • Other news: News from PR Newswire
| More

Charting the Multi-Timeframe Make or Break Support at Dow 12000

Mon, Aug 1, 4:11 PM ET, by Corey Rosenbloom

Well, here we are at the well-known Make or Break chart support at Dow 12,000.

This is what I mean when I say refer to critical chart reference levels to make objective sense of all the good and bad – often confusing – economic/political headlines affecting the market at the moment.

It’s really as simple as “The market is holding critical support so that’s objectively bullish, or it’s firmly breaking strongly under critical support which is objectively bearish.”

If you’re finding yourself confused as to which way is up or down in the US Equity Markets, take a moment to look at the following reference charts:

If you prefer the S&P 500, check out my prior reference post on the S&P 500:

“Making Sense of the Current SP500 Market Range”

“SP500 Critical Support on Weekly Trendline Confluence”

I’m a fan of keeping charts (technical analysis) as simple as possible and here it is:

Either the market supports and holds bullishly at 12,000, returning higher as it did recently in 2011 or it doesn’t, which opens up the door to expect 11,500 or even lower for a full trend reversal.

What we’re seeing presently in 2011 is very similar to that of mid-2010 where 10,000 became the major market “Make or Break” Bull/Bear Line in the Sand.

It’s not magic and price didn’t respect 10,000 perfectly, as seen with the 2010 low of 9,600 in June. We could still see a similar “nip” or trap here at the 12,000 level so don’t expect 100% perfection of chart magic.

Key levels reflect true battle points between Buyers and Sellers (Supply and Demand). A key level that breaks thus forces action from those trapped by failed expectations.

Subsequent moves create “Feedback Loops” that send the market moving off the inflection point in a sustained move. Traders look to take advantage of these low-risk points.

Let’s step inside the Daily Chart to see another reason why 12,000 is so important on the chart:

Similar to 1,280 on the S&P 500, the 200 day Simple Moving Average rests almost exactly at 12,000 which joins both the short-term trendline from the March 2011 low and the intermediate trendline as seen on the weekly chart.

Buyers have placed simple stop-losses under 12,000 and 11,900 (June low) which will be triggered should sellers push the index under 12,000 then 11,900. That’s something a trader can expect.

A breakdown under 11,900 returns the market to 11,600 where it will be a major battle of buyers and sellers. Should buyers/bulls lose the Supply/Demand battle at 11,600, then this could be deemed as an intermediate term sell-signal which would suggest (or confirm) a trend reversal down on the higher timeframe.

Key levels like this aren’t magic – however, they often trigger self-fulfilling prophecies that result in perpetual moves called “Feedback Loops” where traders can take advantage (or limit losses if caught on the wrong side of a feedback loop).

Speaking of Traders, aggressive short-term traders can easily take advantage of a price movement into a major/key price level:

Let’s assume you are an intraday or swing trader looking to buy into the expected support at Dow 12,000 (whether using futures or the DIA ETF or corresponding stock or ETF).

As the Dow tested the critical 12,000 level from 10:30 to 11:30am (CST), we observed reversal candles that were accompanied by both a positive momentum and TICK (market internal) divergence.

The combination of reversal signals and positive divergences off a critical make-or-break support level suggested odds favored an upward reversal in price.

If the upward reversal thesis failed, then that’s ok because this situation allowed for a tight stop under the 12,000 level (11,990, 11,980, and so on depending on your risk tolerance).

Keep in mind that price has a tendency to nip a few points under a critical level before reversing – we call this a “Finger,” “Trap,” or “Rinse/Wash” Situation. It happens.

Aggressive traders like to buy INTO a support level while conservative traders like to buy AFTER support held and price then breaks a falling trendline or moving average.

Price broke above 12,050 at noon, then broke above 12,075 at 1:45pm.

It can be a little less stressful to buy on a breakout than buying into support, at least if you want greater odds that a support level is holding.

At 12:30pm, the TICK (internal) gave a “Kick-off” Reversal signal which further confirmed that the odds shifted to favor a positive/bullish reversal.

As of this writing, price rallied higher from 12,000 to the 12,125 level.

Anyway – that’s a discussion of a short-term intraday set-up, the kind of which I describe each day in the Idealized Trades reports (with more detail, explanation, and trade logic for reference).

The main idea is this:

There’s a lot of economic and political news affecting the market at the moment – more than usual.

At times of increased noise and volatility, it’s important to pull the perspective back and look at the big picture to focus on critical price levels in key markets.

For now, 12,000 is the critical reference level to watch in the Dow Jones, just as the 1,280 and 1,260 level is critical to watch in the S&P 500.

Use these levels as references to guide your game-plan and trading decisions accordingly – otherwise you may feel very bullish one day and then tremendously bearish the next.

Ground yourself with objective price reference levels and observe how price is behaving at these levels.

Corey Rosenbloom, CMT
Afraid to

Follow Corey on Twitter:

Corey's new book The Complete Trading Course (Wiley Finance) is now available!

SDI Glossary: "price" Definition
SDI Glossary: "Equity" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Support" Definition
SDI Glossary: "TA" Definition
SDI Glossary: "TICK" Definition
SDI Glossary: "Trend" Definition
This Article's Word Cloud:   Corey   Loops   advantage   afraidtotrade   battle   both   bullish   chart   critical   economic   expect   from   here   higher   important   intermediate   into   level   levels   like   look   magic   major   market   moment   objective   odds   points   political   positive   price   reference   reversal   seen   short   simple   support   take   term   that   then   these   this   traders   trendline   under   where   which   will   with

| More

Corey's February 5 Trend Day Market Update and Stock Scan
Fri, Feb 5, 4:11 PM ET, by Corey Rosenbloom

Tech stocks lead the market lower and there are some surprising drops in major names. ...

Corey's Midday Market Update and Stock Scan Feb 4
Thu, Feb 4, 6:41 PM ET, by Corey Rosenbloom

Yesterday saw a bullish “surprise” reversal and today gives us the opposite – a bear ...

Sell Swing Market Update and Stock Scan Feb 2
Tue, Feb 2, 9:12 PM ET, by Corey Rosenbloom

Stocks fell sharply from a key overhead resistance target – with divergences – to produce ...

Google GOOGL Surges to New Highs on Earnings
Tue, Feb 2, 1:22 PM ET, by Corey Rosenbloom

Google (GOOGL) broke impulsively higher to a fresh new all-time price high today after yesterday’s ...

Feb 1 Crude Oil Trade Planning Levels
Mon, Feb 1, 1:12 PM ET, by Corey Rosenbloom

Crude Oil (@CL) broke lower at resistance with stocks this morning. Let’s overlay a Fibonacci ...

The Bullish Breakout and Uptrend Continues in Google GOOGL
Fri, Jan 29, 6:22 PM ET, by Corey Rosenbloom

With the market bounce continuing today, Google (GOOGL) – one of our “strong stocks getting ...

Jan 28 Wide Range Day Update with Stock Scan
Thu, Jan 28, 6:22 PM ET, by Corey Rosenbloom

Price is pivoting between the wide range from yesterday’s Fed Announcement. Let’s update our levels ...

There's the Break but Will it Hold?
Wed, Jan 27, 6:22 PM ET, by Corey Rosenbloom

There we go! The S&P 500 surged above 1,900 this morning! However, is this the ...

Rally into Resistance Update and Stock Scan Jan 26
Tue, Jan 26, 6:22 PM ET, by Corey Rosenbloom

Today’s action so far completely erased the bearish action of yesterday, but price still couldn’t ...

Jan 25 Market Update and Trending Stock Scan of the Day
Mon, Jan 25, 6:22 PM ET, by Corey Rosenbloom

The consolidation continues into the 1,900 level in the S&P 500 and we have new ...

Start Your Week with Corey and a Live Briefing Monday
Mon, Jan 25, 1:12 PM ET, by Corey Rosenbloom

I’m excited to announce that I’ll be returning for a fifth time to join a ...

Market Breadth Update Then and Now Jan 21
Thu, Jan 21, 6:22 PM ET, by Corey Rosenbloom

What’s Breadth suggesting about the current market? And how was it extremely helpful in calling ...

The Top Five Best and Worst Dow Stocks So Far in 2016
Thu, Jan 21, 1:12 PM ET, by Corey Rosenbloom

With the S&P 500 falling over 11% at the beginning of 2016, which big-name stocks ...

Three Quick Charts Underscore How Bad 2016 Has Been
Wed, Jan 20, 1:12 PM ET, by Corey Rosenbloom

As we focus on the US Stock Market, let’s pull the perspective back. Let’s focus ...

Downtrending Twitter TWTR Cannot Catch a Break
Tue, Jan 19, 3:52 PM ET, by Corey Rosenbloom

“Stocks which are weak tend to get weaker.” Twitter (TWTR) continues to demonstrate the power ...

Relentless Selling Market Update and Trending Stock Scan Jan 15
Fri, Jan 15, 6:22 PM ET, by Corey Rosenbloom

Can buyers catch a break? Or better yet, catch a falling knife? Not yet it ...

Big Reversal Rally and Market Update with Stock Scan Jan 14
Thu, Jan 14, 6:22 PM ET, by Corey Rosenbloom

Some might say we were way overdue for a larger rally or snap-back bounce for ...

Critical Pivot Level Planning for SPX and NASDAQ
Thu, Jan 14, 1:12 PM ET, by Corey Rosenbloom

With the downside target fully achieved on a second “crash,” we prepare our next move ...

$30 per Barrel Achieved for Crude Oil - What Now
Tue, Jan 12, 1:22 PM ET, by Corey Rosenbloom

Crude Oil finally (and fully) achieved its downside round-number target of $30.00 per barrel this ...

The Surprising New Impulse Low for the Russell IWM
Fri, Jan 8, 4:22 PM ET, by Corey Rosenbloom

Just how low can this market go and how many more support levels can it ...

The Catalyst and Targets for a Bullish Rally Jan 8
Fri, Jan 8, 3:42 PM ET, by Corey Rosenbloom

Are stocks set to bounce (rally) after multiple days of selling? Divergences at support say ...

More Selling and Jobs Market Update and Stock Scan Jan 8
Fri, Jan 8, 3:22 PM ET, by Corey Rosenbloom

You would think that a stronger Jobs Report this morning would be a catalyst for ...

The Five Surprising Downtrending Dow Jones Stocks at Fresh New 52 Week Lows
Thu, Jan 7, 4:12 PM ET, by Corey Rosenbloom

Are you ready to be surprised? Five leading, well-known stocks in the Dow Jones Industrial ...

Weekly Distribution Arc Trendlines and Targets for SP500 and Dow
Thu, Jan 7, 1:22 PM ET, by Corey Rosenbloom

2016 begins very bearishly, and the selling continued this morning. Let’s focus on the Dow ...

Jan 6 Another Crash Market Update and Big Stock Scan
Wed, Jan 6, 6:42 PM ET, by Corey Rosenbloom

2016 is off to a bearish beginning as the S&P 500 plunged to fresh new ...

The Year in VIX and Volatility (2015)
Tue, Jan 5, 3:52 PM ET, by Bill Luby

Every year one of my most-read posts is my annotated overview of the year in ...

Smith and Wesson SWHC Surges on Day of Obama Executive Order
Tue, Jan 5, 3:52 PM ET, by Corey Rosenbloom

Leading gun manufacturer Smith and Wesson (SWHC) surged on the very day President Obama announced ...

Trade Planning and Targeting for Google and Amazon GOOGL AMZN
Mon, Jan 4, 4:12 PM ET, by Corey Rosenbloom

Big trending stocks Google (GOOGL) and (AMZN) took a big bearish hit (gap down) ...

Every Single VIX ETP (Long and Short) Lost Money in 2015
Mon, Jan 4, 8:12 AM ET, by Bill Luby

Just one month ago, in The Current VIX ETP Landscape, I plotted all twenty-four VIX ...

The Case Against High Stock-Market Volatility in 2016 (Guest Columnist at Barron's)
Sat, Jan 2, 3:52 PM ET, by Bill Luby

About a month ago, when Steve Sears and Barron's asked if I would be interested ...

Flat but Not Boring Year for 2015 SP500
Thu, Dec 31, 1:32 PM ET, by Corey Rosenbloom

If the 2,060 level for the S&P 500 seems familiar for you, that’s because it ...

Dec 29 Big Holiday Bullish Trend Day and Surging Stock Scan
Tue, Dec 29, 2:52 PM ET, by Corey Rosenbloom

Another holiday week bullish breakout triggered with this morning’s gap, creating a bullish short-squeeze. Check ...

Dec 28 Reversal Market Update and Trending Stock Scan
Mon, Dec 28, 3:52 PM ET, by Corey Rosenbloom

Stocks played off a key pivot level this morning, but reversed off support mid-morning. Let’s ...

Intraday Bears Everywhere Except Bonds Monday
Mon, Dec 28, 12:32 PM ET, by Corey Rosenbloom

If you’re following Money Flow across the main markets this Monday morning, you’ll notice the ...

Enhancing Performance with Low Volatility ETPs
Mon, Dec 28, 12:22 PM ET, by Bill Luby

One theme that I will spend more time on in 2016 and beyond is the ...

Stellar Bullish Trend Day Update and Surging Stock Scan Dec 23
Wed, Dec 23, 4:12 PM ET, by Corey Rosenbloom

Santa Claus continues to deliver the bullish goods to the market today! First, take a ...

The Santa Claus Rally Finally Appears!
Wed, Dec 23, 12:22 PM ET, by Corey Rosenbloom

It’s about time! The famous “Santa Claus Rally” occurred this holiday week. Many traders were ...

Netflix NFLX Struggles to Hold Key Support
Tue, Dec 22, 11:22 AM ET, by Corey Rosenbloom

Will Netflix (NFLX) hold critical support and bounce higher to continue the uptrend? Or perhaps ...

Tracking Money Flow and Sector Rotation Video
Mon, Dec 21, 7:42 PM ET, by Corey Rosenbloom

James Ramelli and I presented a featured webinar earlier in December entitled: “How to Follow ...

Big Stock Scan and Midday Market Update Dec 21
Mon, Dec 21, 3:52 PM ET, by Corey Rosenbloom

Today’s session – while bearish – is showing hopeful bullish signs. What are they? Let’s ...

A Bottom Fishing Buy for Chipotle CMG?
Mon, Dec 21, 12:22 PM ET, by Corey Rosenbloom

Might Chipotle (CMG) be flashing a “bottom fishing” bounce (buy) signal at current lows? More ...

What Breadth Says about the Current Market Dec 21
Mon, Dec 21, 11:52 AM ET, by Corey Rosenbloom

What message does Breadth reveal to us right now during the holiday week? Let’s take ...

Big Stocks Downtrending in our Update and Scan Dec 18
Fri, Dec 18, 3:42 PM ET, by Corey Rosenbloom

Wow – we’ve got some big names taking a bearish hit today in our “downtrending ...

Post Fed Volatile Market Update and Scan for Dec 17
Thu, Dec 17, 3:14 PM ET, by Corey Rosenbloom

Well that bullish post-Fed rally was fun while it lasted. Today’s session so far has ...

Google GOOGL and Amazon AMZN are Giving the Same Trading Setup
Thu, Dec 17, 11:13 AM ET, by Corey Rosenbloom

Whether you’re a Google (GOOGL) or Amazon (AMZN) trader, these high-flying, uptrending stocks are showing ...

Gold Has Officially Gone Crazy - How to Make Sense of it
Thu, Dec 17, 10:52 AM ET, by Corey Rosenbloom

Gold surprised both bulls and bears with high volatility and “gappy” price movement this week. ...

Downtrending Apple AAPL Triggers another Sell Signal
Wed, Dec 16, 12:12 PM ET, by Corey Rosenbloom

What’s going on with Apple (AAPL)? This week shares broke a key trendline support level, ...

Stock SWN: From Zero to Hero Way Back to Zero
Tue, Dec 15, 2:12 PM ET, by Corey Rosenbloom

Southwestern Energy (SWN) gives us a textbook example of the cycles a stock goes through ...

The December Color Ribbon of Resistance Chart
Tue, Dec 15, 12:22 PM ET, by Corey Rosenbloom

What “Wall of Ribbon Resistance” must the stock market clear? Let’s update our special “Color ...

The Fed Funds Rate and the SP500
Tue, Dec 15, 11:12 AM ET, by Corey Rosenbloom

How have stocks performed over the last 15 years in environments of both rising AND ...

  More articles:  1 2 3 4 5 6 7 next »


Charting the Multi-Timeframe Make or Break Support at Dow 12000 | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: -- a subscription-based online social networking forum of serious individual investors. | -- videos appearing on SDI are produced by Market News Video. | -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.