Barfing.com Technical Levels : So if you like a flat market, it doesn't get any better than the past week. Looking back at the prior five sessions points to just how flat this market has been. If you take Friday's open at 1,395 all the way through yesterday's close at 1,399 you end up with a fascinating open/close net change of about four points -- again that's over the course of five sessions.
Now coming into this week, the morning of Monday December 9th we pointed to 'cross currents' in the market which suggested that 'on an intermediate-term basis the markets are likely to chop around.' In fact, that was the primary point of Monday's piece. Since then, we've taken conditional stances with a slight positive bias, but have been unable to justify an unequivocal change to that overriding neutral tone. As the saying goes, you can't make a silk purse out of a sow's ear.
At any rate, yesterday's session in which the Nasdaq tacked on another three points fits with the recent consolidation pattern. Now on an intraday basis, yesterday's price action looked somewhat interesting, and it never hurts to take a quick look the intraday chart. Keep in mind that when we reviewed the Nasdaq yesterday, we were looking for initial support at congestion in the area of 1,387 to 1,390. Conversely to the upside, we were watching for overhead at the Nasdaq's 20-day exponential moving average of 1,411. So those were the inside technical levels -- the ones nearest to Wednesday's close.
In the chart above, you can see that these inside levels weren't too far from the mark in terms of the actual intraday activity. Again, this is an intraday chart of Thursday's trade activity in which each bar on the chart represents the opening and closing levels for each five-minute time frame. While we were looking for support in the range of 1,387 to 1,390, the index flattened at 1,389 with an intraday low at 1,388.5. Also note that our first resistance at 1,411 turned out to be very close to the mark as well -- the intraday high on the index came in at 1,411.6. The final point of interest is that these levels were each tested relatively early in the session while second half of the day accomplished nothing from a technical standpoint.
Now all this leads us to the question of how the markets look at current levels. Looking back over the previous five sessions, it's relatively clear that the Nasdaq has been consolidating between it's 20-day exponential moving average -- currently at 1,407 -- and its 20-week exponential moving average -- currently at 1,381.
So those are the two levels that will substantially contribute towards establishing the near to intermediate-term bias. On a close below 1,381 look for additional consolidation -- on a close above 1,407 the near-term bias improves.
For those operating on a shorter-term basis, if the 20-week ema should fail to hold look for a subsequent floor at straight-line support of 1,375. The 1,375 level is followed by subsequent support points at 1,367 and 1,360 which happen to bracket a former gap on the chart as well as a notable Fibonacci retracement. Now if each of those support points would fail, it would be time to start looking towards arguably more important support at the index' 50-day simple moving average of 1,346. -- Mike Ashbaugh, Briefing.com |
