Sunday, July 13, 2008

$NDX Update for 07.13.2008

Monthly chart shows a lower high being made in June 2008, where the bears came out in force, selling their positions. This lower high is an aggressive sell signal, with the March 2008 low as the first target to see if there will be support or not coming into the market. With both the Dow Jones Industrial Average and the S&P 500 index breaking their 2008 lows, it is more likely that the Nasdaq 100 index will eventually do the same.
Weekly chart better shows the lower MSH (market structure high). The index is below all its key moving averages, and the bulls have already given back more than 62% of the gains made since March 2008. No buy signal/pattern evident on this timeframe.

Daily chart shows the bears gapped down the open on Friday's trading session in their hurry to exit their positions. Friday's move down was made with regular divergence on the CCI Indicator. Friday's trading action shows that there was initial buying and short-covering when the index made a short term lower low. Possible consolidation before the next move. Currently it looks like the index has been stuck in a wave 4 consolidation pattern. IF the index has been tracing out a wave 4 consolidation pattern, THEN a lower low is highly likely. When the index moves back above the down trendline in place, that will be evidence that the down move has been complete, and that the next wave has begun.

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