Four US Equity Index Target Checkup on Support Breakdown

Jun 5, 2013: 12:04 PM CST

As traders, we’re often planning “IF/THEN” outcomes depending on whether price successfully supports and rallies up off a support area, or else fails by breaking support which opens a tradable move to the next level of potential support (target).

Let’s take a quick look at the current simple support reference levels in the Dow Jones, SP500, NASDAQ, and Russell 2000 US Equity Indexes.

The goal of this post is to identify Daily Chart reference levels for targeting and short-term trade planning.

In all markets, we’ll be looking for a continuation play toward these levels and then a “Will it Break or Hold” scenario planning (If/Then logic) with respect to these support levels.

If these support levels fail – meaning bears overpower sellers at a known chart-based support zone – then it opens the markets to fall further toward the next lower support target as highlighted.

For the Dow Jones, the current support target exists here at 15,000 which is simply a Round Number, yet a more accurate downside target resides at the rising 50d EMA (14,920) then prior “Polarity” or resistance level into 14,850.

Further breakdowns under 14,850 open a play down to the next support into 14,450.

For the SP500, the breakdown today (officially) under the rising 20d EMA (1,635) opened the intraday/short-term target to play toward the confluence of the 50 day EMA and 1,600 “Round Number” support reference zone.

The 50d EMA rests just above the easy-reference 1,600 Round Number level at 1,607.

I highlighted the two prior events where a similar breakdown-into-support outcomes resulted in a rally.

We’ll be watching for any sort of successful test of support again for the third time, or else extend the target lower to the next support level into 1,550.

The NASDAQ may have further to fall toward its rising 50d EMA which intersects 3,367 but we’ll be watching today’s reaction (test) at the simple “Round Number” 3,400 reference.

Failure at these levels opens a further play to the downside into 3,300.

In the Russell 2000, we see a failure to break above the easy-reference 1,000 index level which set the stage for the recent decline or retracement.

For the Russell, the failure to hold the 980 and rising 20d EMA level led to the current ‘breakdown’ play toward the 50d EMA at 960 then perhaps more importantly the Polarity or prior resistance confluence near 950.

Intraday traders can sometimes miss the larger picture or larger levels particularly on days where price action is volatile, but remember to incorporate even simple higher timeframe inflection or planning levels into lower frame decisions.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “Four US Equity Index Target Checkup on Support Breakdown”

  1. Four US Equity Index Support and Fibonacci Target Planning Update | Afraid to Trade.com Blog Says:

    […] Target Planning Update Jun 7, 2013: 8:45 AM CST As a follow-up to Wednesday’s similar “Daily Chart Support Target” post, let’s update the four US Equity Indexes on the Daily Chart to highlight the immediate […]

  2. Four US Equity Index Support and Fibonacci Target Says:

    […] a follow-up to Wednesday’s similar “Daily Chart Support Target” post, let’s update the four US Equity Indexes on the Daily Chart to highlight the immediate inflection […]