Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Nasdaq Tek Stock NDX at 2050!

Stock-Markets / Stock Markets 2010 Apr 26, 2010 - 01:24 AM GMT

By: Piazzi

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleI have to go many posts back to find the first time I mentioned 2050 area as a resistance, and the 1970-2050 range as an active range.

And it seems like just yesterday when I said that the move out of Feb low looked more and more like the move out of July low and might destroy the bears and leave many bulls behind waiting for a pullback.


Well, as a well respected Canadian technician, Bill Carrigan, once said, investing is not a spectator sport :-)

We had quite a week, with two very rough days that coupled with constant noise of financial media about Goldman-SEC and Greece this and PIIGS that felt like the world was coming to an end and stock certificates would lose their value faster than the paper bankers print.  Well, as it turned out both days of sharp selling were long opportunities for traders. That’s the thing with a well established trend, it persists.

It, of course is a matter of, first, deciding on the trend, second, having the aptitude to play the trend, third, having the discipline to maintain a holding with the trend.

As for aptitude and discipline, one cannot help others that much. As for identifying a trend, there are many different ways, one can present and discuss one’s methods. It is then up to the audience to pick and choose parts that suits them and their personality.

Speaking of tends, it is, of course, a matter of time frame.

This is weekly chart of NDX that we have seen many times.

You can go back many posts, and see for yourself that the annotations on the chart have hardly changed. Most of the levels are still the same (I made a change from 1973 to 1970). All of the actionary lines are still the same. It does not take a PhD in astro-physics to see the trend. All my moving averages have been in positive alignments since August 2009.

There, of course, is always the possibility of an uptrend being a counter trend rally. Bears had an excellent opportunity to take control of the market in June-July 2009. They were defeated. They again had a chance in Nov 2009, and could not capitalize. Then came the Jan-Feb 2010.

On February 7, right after what we now was the low, I said

“I think market went into weekend with a state of technical equilibrium, both bulls and bears have to prove themselves in coming days”

That’s exactly what both parties did – proving themselves. Bulls proved that they meant business. Bears proved that they were defeated. What the uptrend that followed the Feb low shows us was that the move from March Low was a 5-wave affair, and as such, and as per tenets of EW, it had a very low probability of being terminated abruptly (I never say never, and do not give a damn what EW or any other methodology says, there is no absolute certainty about the future, ever!).

Now, the weekly is overbought and at resistance.

It was during the first month (or so) of this blog that I wrote a few words about how in uptrends, overboughts are best ignored and oversolds are best accumulated (the reverse goes for downtrends). In range-bound markets, one may be better off selling overbought and buying oversold. One reason is that it makes for good trading. Another reason, which I deem more important, is that one never knows with certainty which way the range resolves.

In an uptrend, overbought readings can become useless as means of trading. In a relentless uptrend, time analysis and cycle analysis may become somewhat erratic, or ineffective as time series and shorter cycles may become stretched (or squeezed depending on whether they are predicting a high or a low). Even with cycles that hit the turns in their window, the low of a strong uptrend may not correct that much.

Price is the most important indicator of all. Everything else – absolutely everything else is what we (and others) do based on some statistical past to build a probabilistic model to predict the future.

"Essentially, all models are wrong, but some are useful".
– George Edward Pelham Box

With that cheery quote, let’s get on with our charts

On the weekly chart above, a move higher than 2050 may put a lot of pressure on whoever has been awaiting a pullback to join the party lest it goes out of style. I hope it does not happen. I hope market corrects or consolidates and relieves some overbought conditions. That’s not because I am benevolent and want others to have a piece of action but because I don’t like fast and furious melt ups. They are hard to gauge and analyze – not much use analyzing a parabolic move, it goes till it runs out of fools and then hangover settles. I hope it does not happen like that, but it is very possible here, depending on whether fat cats finally sell for profit or not.

One thing to keep in mind is that, when price makes new highs, there are mainly two groups of speculators, the shorts who are badly burnt and of little significance, and the happy longs who may have no reason to sell. There no more remain disgruntled longs from earlier peaks to and get out even. So, we need to watch for signs of selling and distribution.

In the weekly frame above, it’s hard to find technical support that would not involve a serious point drop. We have 1970 (80 points lower). We have the blue actionary line and the 13 EMA around 1930 (120 points lower) and those are the closest I can pin point on the chart. If NDX busts above 2050, it can then finds a close support but being overbought may make it hard to psychologically commit a big chunk to a new position. It will be more like the realm of traders and momentum player.

Other than what is apparent from the weekly chart, I ran some price range and volatility-based algorithms that I have developed and also did a standard calculation of floor pivots. I then selected some area of commonality from the two sets and came up with these levels

2090
2065-2070
2030
2010-2015
2000
1986

This is all theoretical, of course, and I treat them as some signposts of probable support and resistance

This is a daily chart

Other than overbought (which may not mean much in an uptrend) and being at resistance, I can’t find much else negative to say about the recent price action. It’s been murderously cruel to bears and very unkind to out-of-position bulls.

There is a lot of support from a lot of levels and all the MAs.

Breadth, however, has been mixed.

Advancers have outpaced decliners every day, and the A/D line has been making new highs. Daily Up volume has been nice and green

Overall the breadth has been good on a day-to-day basis, but the McClellan group of oscillators and the Bullish Percent Index, have gone soft

This is a chart with McClellan group of oscillators

Since March 2009, every time Bullish Percent Index crossed below it MA 10, NDX had some sort of correction

We have the same type of McClellan breadth divergence in the semiconductor group as well

These are just warning signs that may later prove to be early signs of a correction. They do not necessarily mean a top, just part of the whole picture that is not functioning well at this moment. Remember, Price is the final judge of the whole thing, and with a strong trend, other measures, like breadth, can correct and recover while price goes sideway or slightly down.

This is a 60-min chart

There seems to be 3 clear technical levels of importance at this time. The 1990 area was tested twice and played as a springboard for a good run.

The 2010-1015 area was also retested and led the reversal on Thursday. 

The 2035-2040 resistance was taken on Friday and looks like a first level of short term support. I’d say that the area between the 2035-2040 and the blue zone and the mid-line of the channel looks like a possible technical buffer zone right now.

Since March this year, the duo-team of 34 and 89 EMA have stopped every short term pullback.

The current count seems to have worked well so far. If correct, we are in a 3rd wave, and may expect a 4th and a 5th to follow. If correct, the 2035-2040-mid-line buffer zone I mentioned above should hold. A failure of that zone early next week may put the current short term move in jeopardy.

So,

Market has been brushing off anything bad that media has thrown at it: Greece, PIIGS, Goldman-SEC, Financial Reform, FED’s end of QE, The Chinese and what they say about mortgages in China, whatever. Does that mean we are in a true bull that will run forever, and ever? Does it mean that the sugar high from government borrowing and FED liquidity has got the better of all participants? I don’t know, but why not let the market decide when it is that I should fold? The game is still the same as far as I am concerned, ignore the noise, follow the technicals, be flexible, methodical and disciplined, and do not try to tell the market what it should do.

And keep an eye on these levels
Once more, levels I will be watching are

2090
2065-2070
2030
2010-2015
2000
1986

From a broader point of view, for now, as long as NDX is above 1970, it's either rallying or consolidating.

Have a Nice Week!

By Piazzi

http://markettime.blogspot.com/

I am a self taught market participant with more than 12 years of managing my own money. My main approach is to study macro level conditions affecting the markets, and then use technical analysis to either find opportunities or stay out of trouble. Staying out of trouble (a.k.a Loss) is more important to me than making profits. In addition to my self studies of the markets, I have studied Objective Elliott Wave (OEW) under tutorship of Tony Caldaro.

© 2010 Copyright Piazzi - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in