Mini Dow (DJX)

Today was a perfect, perfect setup on the DJX to the downside. If only I could trust these setups more often! (Of course, no one wants the market to go down, either, so that can be an emotional block to trading this close to the lows.) I so want this market to rally, but it is not cooperating...

The moving averages went bearish on the 3-minute and 5-minute charts, corresponding to bearish indicators on the 30-minute chart. The target was very clear: the lows of yesterday. So the trade was clearly defined and backed up by bearish internals. The TRIN was above 1.0, which often seems to correspond to more possible momentum to the downside. (The Think or Swim platform is fabulous and has a plethora of information available on measuring and tracking internals.)







The target of yesterday's lows also was wise to follow because it was possible to see a rally off of those levels, which is exactly what happened (but the rally did not hold). Also, the emotional factor of not wanting the market to fall further can cloud judgment, so it is better to undershoot your target rather than get whipped around in the other direction. A little undershooting was in order today, as the lows of yesterday were not quite reached. The Dow came within 17 points of those lows.