Nasdaq Levels and thoughts From Firm

As seen in the attached report on the NASDAQ 100 chart the index has rallied up to resistance the last few days and then sold off hard from that level. This would be a natural spot for the rally to stall/retrace after rallying 38% from its’ lows. Ultimately we think the index can work above this level after a good pullback/retracement of some magnitude. That said the next level of good support on the index is the 1,284 level. This level coincides with a Fibonacci retracement level as well as support from the earlier range breakout and would be a logical downside target and support level. Ultimately and only mentioned as a frame of reference, should we work eventually above yesterday’s resistance level the next target up would be 1,700, which would be a combination on a downtrend line and the next resistance zone. Though for now we are more concerned with the present which suggest we are in rally correction mode.

Certainly there was some conviction to the selling yesterday as down volume swamped up volume by a ratio of 27 to 1 and decliners bested advancers by a 6.2 to 1 ratio. For now the near-term trade direction is down until proven otherwise via internals improving dramatically and/or yesterday’s resistance being decidedly cleared.

Nimble traders can trade from the short side for a bit while others may want to use an index ETF to grab some temporary short exposure. Additionally for those who have substantial profits in names we would tighten up the stops.




posted by Peter Greene