Don, I agree that the apparent basing pattern in the NDX may be a topping process. This basing pattern is visible in the NDX's hourly chart. Basically, the NDX has been in a trading range since 9/3/99.
In further support of the "topping process" theory, consider the following:
On its weekly candlestick chart, the NDX made a HANGING MAN LINE. Here's what MetaStock's Candlestick Expert Adviser has to say:
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with NASDAQ 100 INDEX) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.
Also, on its weekly chart, the NDX failed to surpass last week's high of 2549. Weekly Stochastic is in overbought territory and the NDX closed near its upper trend channel line (upper trend line across weekly tops of 2/5/99 and 7/16/99).
There are also bearish divergences between the NDX price and RSI and MACD. On its weekly chart, NDX has made higher highs during the weeks ending 1/29/99, 4/9/99, 7/16/99 and 9/10/99, but RSI and MACD have been making lower highs.
On its daily chart, there are also bearish divergences between the NDX price and RSI and MACD. The NDX made higher highs on 7/16/99 and 9/10/99, but RSI and MACD made lower highs.
Don, I'm not an expert, but it looks to me that the NDX is loosing momentum. |
