We are finally seeing the movement we were waiting for, and it?s not good for the
bulls. Even with today?s move up, the equation is simple: lower lows + lower highs =
down trend.
NASDAQ COMMENTARY
Failing to move above 1330 showed that the uptrend was weak, but we didn?t know how
weak it was until we also failed to stay above our other resistance point at 1315.
While we?re touching on that level today, we?ve spent most of our day on the lower
end of the trading range. And even closing higher today won?t necessarily cure the
pullback
So, we?re mildly bearish now, after setting up some pretty strong support and
resistance lines that are pointing us lower. The composite is also well under both
the key 10 and 20 day moving averages. This is the first day in the last three weeks
that we haven?t at least touched them, and considering where we came from prior to
that (around 1260), the pattern suggests that we just saw a failed rally.
The part that concerns us the most is not the failed rally, but the response to it.
Typically, when you get stopped from moving up, you move down even further. Just how
far can we slide now? The 200 day moving average may provide that information. The
last two times we approached it and didn?t cross it, we fell about 160 points. We
didn?t quite approach it this time around, so the fall may not be as harsh. We?d
rather wait for couple more days of confirmation, but a fall to 1220 wouldn?t be out
of the question.
We?ll hold off on that target just yet, since we?re only mildly bearish at this
point. But if the rest of this week goes badly, we?ll move from mildly bearish to
fully bearish.
Support is at 1300 with resistance at 1315. Stops on our bearish bias come with a
close above 1330.
Daily Chart of the Nasdaq Composite (COMPX)
OEX COMMENTARY
The OEX looks as weak as the Nasdaq, and for the same reason. The weak rally crumbled
as we fell back into our longer term downtrend. We could have assumed this was going
to be the case after nearly two weeks of sideways movement, but we got confirmation
today.
How is it confirmed? First, where 420 had previously been support, it is now
resistance. (support levels that become resistance later tend to be a little
stronger). Today was also the first day in the last three weeks that we didn?t trade
at the 10 and 20 day EMA levels. Trading completely under them is bearish. After
three consecutive days of lower lows and lower highs, the case for a downtrend
becomes stronger.
We?re also seeing falling momentum (as seen on the chart). While we did see a rising
momentum line over the last few sessions, it seemed to taper off before crossing
zero, and momentum under the zero line is questionable momentum.
Our outlook is mildly bearish for the S&P 100, but we could potentially be fully
bearish by this weekend. We?ll need to see the weekly data first.
Support for the OEX comes at 414 with resistance at 420. The stop on our bearish
posture is a close above 425.
Daily Chart of the S&P 100 (OEX)
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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