Stock indexes make a break for it

WEDNESDAY'S MARKET WRAP-UP

Market Snapshot for January 18, 2011 (6:23 p.m. ET):
Closing Prices: DOW 12,578.95 (+96.88, +0.78%), S&P 500 1,308.04 (+14.37, +1.11%), NASDAQ 2,769.71 (+41.63, +1.53%), Nikkei 225 8,550.58 (-, -%), DAX 6,354.57 (+21.64, +0.34%), FTSE 5,702.37 (+8.42, +0.15%)
OIL 101.52, GOLD 1,661.60, SILVER 30.52
EURO 1.2864, YEN 76.81, BRITISH POUND 1.5434, U.S. DOLLAR INDEX 80.82

Price Levels to Watch

As the market has crept higher over the past month, it's been teasing the bulls and bears alike. Although not quite on the scale of the late-October overlap, narrower trading days have seen a great deal of price retracement from one session to the next since late-December. This becomes risky for the bulls because a breakdown in the trading channel tends to lead to very rapid corrections, such as the one experienced in November.

The market threatened such a rapid correction twice over the course of the past week. The first threat took place Friday and into Monday morning. A rapid breakdown on Friday needed only a gradual correction to offer a strong setup for a daily breakdown into the new trading week. The market, however, held on. Instead of offering a second high and a trigger in futures trading on Monday, the index futures pushed higher into Tuesday morning, negating the first attempt.

A second attempt took place on Tuesday and into Wednesday morning. Once again, the indices fell quickly off highs and began to congest at the lower end of the trading range. Once again, however, that lower channel held and the market pulled higher throughout most of Wednesday's session.

Dow Jones Industrial Average (Figure 1)

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