A Daily Swing Trade

One of the most predicitive chart patterns you will come across is the saucer pattern. Saucers are also referred to as "bowls" or even "rounded tops or bottoms", and one look at this pattern tells where these names are derived from. However, there is a problem with saucer patterns - they're hard to find.

VRSN is holding at a triple touch resistance level at 27.00, which has held since December. Watch this zone for a break or bounce for the next key move.

A has been trading within a very clear trading range since late last August and is now holding at the top of the range at 35.80, which is quite a resistance level. If A cannot rise above this zone yet again, we could see another drop back toward support at 30.25.

- Dow sells off at Open, but reverses course to end day on positive note. The index formed a v-bottom pattern at support at 12,735 and proceeded to trended steadily higher back above the breakeven point for the day to end the session with a 5 point gain, which is quite bullish.

- The NASDAQ and S&P each reversed from early lows today and continue to build out within evolving consolidation ranges. Look for more range development until a breakout occurs.

Summary

The Dow ended the day above 12,800 for the second straight session and continues to build out a large trading range that could offer much bigger strength ahead. Continue to watch the boundaries of this range for key directional movement.

Support indicates a level on the chart where we can expect an increase in the demand for a security (buyers take over). How do we know this? By identifying this reaction to this price level in the chart's history.

BMRN retraced back to 50% after the big Feb/Mar decline and has now taken a breakaway gap to the downside, which indicates that another key sell-off may be ahead. Watch 16.50 for more signs of weakness.

- Dow rallies near all-time highs, holds to the Close. The index came within 5 points of reaching all-time highs and ultimately closed the day with a 53 point gain, but 25 points from new highs. Considering the Dow has rallied this far, we could see a new record set tomorrow before a pull-back occurs.

- The NASDAQ and S&P each traded sideways-to-up today, building out clear ranges in the process. Keep a close eye on the consolidation of the NASDAQ, as this range could give the best directional signal of movement tomorrow morning.

Summary

The Dow put together another strong session today, as the index came very close to reaching all-time intraday highs. The index should be able to make a new high very soon, but could be in for a moderate retracement once a new high is reached.

One of the old axioms of technical analysis is that 'the trend is your friend'. This holds true, as long as you trade in the direction of the trend. However, your 'friend' has two faces, and can turn on you to eliminate profits (and your friendship!). Trend reversals can occur at any time and one of the important skills a trader must possess is the ability to identify a reversal. It is easy to exit a position too early if we over-anticipate a trend reversal, and just as easy to watch our profits evaporate if we are too slow to exit the trade.

ANSS has formed a bearish pennant consolidation at the lows of the February reversal, which indicates that more selling will likely occur. Watch for a potential downside break from this pattern at 49.75 for signs that more weakness will occur.

URI took a big gap up a few days ago, but has been holding near-term support ever since. If support is broken through 30.80, we could see a steady fill of this gap back toward the 27.50 zone.

- Dow reverses from early decline, rallies through 12,600n. The index closed the session near the highs of the day with a nice 59 point gain and is now holding above the key 12,600 level, which holds a lot of significance right now.

- The NASDAQ and S&P each reversed nicely from early lows and closed the day at the session's highs, which indicates strength heading into the weekend. Look for more overall strength above resistance next week.

Summary

The Dow got another morning reversal to the upside, which led to a break back above 12,600 for the first time since February. If the Dow can hold above this zone, we could see much more buying ahead. However, we could see a bit of a struggle in this zone before another key directional move occurs.