Today's slight 37 point decline in the Dow is pretty much what I expected when I suggested that a period of consolidation might follow last Thursday's big gain. At this rate, it would take six more days of similar action to reach the lower edge of the rising regression trend channel and suggest a possible bearish setup. Or, it would take a 174 point loss tomorrow to achieve the same thing. I just don't see either one of these happening this week.
Note how the current uptrend has proceeded in stepwise fashion - big one day gains followed by around a week of sideways or even slightly declining action. With today's loss still keeping us in the center of the RTC, it looks like we're in for more meandering for a bit.
Of course, this all assumes we don't get any alarming news out of Europe. Since Greece has apparently been removed from the PIGS, we're now left with an even more unfortunate acronym for the Club Med countries, which CNBC neatly sidestepped today by coming up with an anagram of IPS, promoting Ireland to the front of the class.
Trades
Today I gave up on my Lowe's trade, taking a 1/4 point profit and selling at 21.98. LOW fell out of its recent rising RTC today and put in an unusual green candle that was still a 20 cent loss, due to having gapped down on the open. This, coupled with a doji last Friday and an ugly looking stochastic plus oversold RSI, makes me think that it's time to bail. The trade was a bit disappointing, but I'll take a 25 cent gain over a 10 cent loss any day.
My low price/high yield basket continues to perform well. CIM recovered from its bad news last week and DHY closed at 3.01. Though I only got in at 2.95, this one is such a low beta that I consider a 6 cent gain to be quite nice. And AMD, which I mentioned as a breakout candidate at 7.29 closed at 8.14 today. I may actually finally turn a profit on this one.
Note
With today's post, I'm adding a new feature to the blog. In the right hand pane up top, I'll be including either a green or red arrow indicating the general trend I'm expecting in the Dow, and by extension the market in general insomuch as it tracks the Dow. This direction is based on regression trend analysis from the last top or bottom. It is not necessarily an indication of where I think the Dow will close tomorrow. It is a trend in a swing time frame.
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