Here’s Another Form of ‘Support’
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Keep in mind that markets don’t trade in
isolation. When one index is at key support or resistance, it’s important to
realize the effect that it might have on the market you’re trading. Although
they might not represent the same basket of stocks, they are definitely related,
and by paying attention to this fact, you might have more confirming ‘support’
for a trade than you realize.Â
09:55:17
Intraday
Index Alert
The NASDAQ cash ($NDX.X)
is testing angular resistance on the daily time frame, after establishing
new relative highs. This downtrend line extends from December 02′ to
March 03′. The NDX is trading higher by 3.70 at 1087.25.
After this post went up under TMs LiveAlerts, the index nudged slightly
higher, before showing signs of reversing at this key daily resistance line.
At the same time that the NASDAQ was struggling to move higher, a
classic pattern was setting up in the Dow Jones Industrials ETF
(
DIA |
Quote |
Chart |
News |
PowerRating).
This intraday set up was posted in our chatroom as the entry bar was forming.
If you only looked at the DIAs in
isolation there weren’t any significant numbers to play this attractive looking
set up off of. The index proxy was not yet testing daily resistance, and even
the 1 Volatility Band had yet to trigger. But, if you paid attention to the
NASDAQ as it started to reverse at important resistance, the evidence, or
‘support’ needed to confirm the pattern entry in the DIAs, just might have been
there after all. You might trade the DIAs exclusively, but sometimes it pays to
look for technical confirmation and divergence in other leading indices when
making a decision.Â
Chris Tyler
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