Tuesday, October 23, 2007

X Marks The Spot



The Nasdaq put forward a very strong move today. Volume accompanied the move, the first time in several months that the index has seen good volume on a move up.

In my previous post here at Trading Goddess's, I suggested an area which the Nasdaq might find support. The index did not yet make it down to those levels. This shows a great deal of strength, though it is certainly possible the Nasdaq may dip from here and visit the 2600-2650 area.

In the chart above, the bottom line represents the uptrend established from the August low. This uptrend was firmly punched through on Friday, October 19th. The upper line is the resistance set from the October high.

This analysis shows the index at a critical moment. The Nasdaq managed to close just slightly above resistance (or right at it, depending on where you draw your line), and closed just below, (or right on) the uptrend line.

A strong showing over the next few days should put the Nasdaq above both lines, and will mean the recent pullback was just another buying opportunity. Failure to overcome the resistance line suggests further retracement is likely.

Basically, if you are short, this is where you stick it to the bulls. If you are long, this is where you ram it to the bears.

The next few days should be very entertaining as both camps fight for dominance.

4 comments:

Broker A said...

nice. check your email.

ducati998 said...

Just 3 stocks responsible for the NASDAQ rise today.......

The pre-earnings rally in Amazon -- along with rallies in Research in Motion (RIMM, news, msgs) and Apple (AAPL, news, msgs) -- were the drivers today that pushed the Nasdaq Composite Index up 45 points, or 1.7%, to 2,799.

The three stocks also propelled the Nasdaq-100 Index ($NDX.X), which consists of the largest Nasdaq stocks, up nearly 48 points, or 2.2% to 2,205. Apple contributed more than a third of the index's gain.

How does that fit with the chart?

jog on
grant

Woodshedder said...

Hard to answer your question Grant as I did not chart the NDX.X

I used the IXIC, which is made up of 3113 companies.

Here is a link to the yahoo listing of its components.

http://finance.yahoo.com/q/cp?s=%5EIXIC

ducati998 said...

woodie,

Fair enough, however, the point remains that "Tech" barring the aforementioned companies is weakening as evidenced by "Sector Analysis" which relates to the Business cycle.

jog on
grant