T/A--Arthur Hill, Stockcharts.com, posted 7/29/00...
stockcharts.com
------------------------------------------------------------------
Edited for ease of reading.
>>> Nasdaq 100--$NDX:
Commentary Posted: 29 July, 2000
Charts Updated: 29 July 2000
Daily View:
Please refer to bottom of the market chart tour homepage for a description of the position ratings and methodology. The full tour (daily and weekly charts/analysis) is updated every Saturday morning. The daily charts are updated every day and a daily market commentary is posted to the market chart tour homepage by 7:00am ET Tuesday through Friday.
22-July: Trading Position = Bear-Hold. The Nasdaq 100 ($NDX) broke key support at 3600 and appears to be falling off a cliff. Even though some momentum oscillators are oversold, the PPO has only recently moved below zero.
Position Points:
The fierce break below 3600 negates any sense of bullishness that I had before. The breakout above resistance at 3850 appears to be a bull trap and a move to around 3000 seems likely.
Volume on the declines of the last three days accelerated and Friday saw almost 1.7 billion shares traded.
The smoothed TRIN moved below 1 to confirm the negative divergence and give a bearish signal.
The Percentage Price Oscillator (PPO) formed a negative divergence, moved below its 9-day EMA and below zero for a complete sell signal in the indicator. Normally, a negative divergence followed by a bearish moving average crossover denotes a sell signal in the indicator. This occurred on Monday.
The 20-period Chaikin Money Flow just now moved below zero and CMF(10) moved below -10% and to its lowest level since late April.
Support: 3700 – Marked by 11-July low. This will be the first point at which I will question my bullish stance.
Resistance: 4100 – Marked by 62% retracement of advance from 2897 to 4816.
--------------------------------------------------------------------------------
Weekly View:
29-July: Investing Position = Bear-Distribute. The Nasdaq 100 ($NDX) formed a lower high, broke short-term support and momentum is turning negative. With the prospects of a decline to around 2300 over the next few months, my position has been downgraded from neutral to bear-distribute.
Position Points:
It appears that a bump-and-run reversal (BARR) is forming and this could get real ugly. BARR was discovered by Tom Bulkowski and he originally referred to it as the bump-and-run formation, which would have had the acronym of BARF. After a little thought, he decided the investment community was not ready for such an acronym and decided on BARR. The advance from May-99 to Sept-99 acts as the lead-in phase of the pattern. The bump phase started with the run up from Oct-99 and continued as the index rolled over to form the Apr-00 low. According to the pattern, we are now beginning the run phase, which is typically down hill and accelerating. Support is usually found from the lows at the beginning of the formation.
Should a downward sloping parallel channel begin in this area, the lower end of the channel would mark support around 2300 in Oct-00.
April’s long black candlestick marked one week in which the index lost almost 1100 points. In the rally over the last 8 weeks, the index has not managed to recoup the loss.
With the sharp reversal, it appears that a lower high is in the process of forming. The index moved sideways for 4 weeks, advanced for 2 weeks and then wiped it all out in the last two weeks.
The Percentage Price Oscillator (PPO) moved into positive territory, formed a much lower high and turned back down into negative territory. Momentum remains neutral, but getting weaker.
The price relative broke above its resistance line, but moved back through almost immediately. Even though the Nasdaq 100 ($NDX) retraced 62% of its Apr/May loss, the price relative only managed to retrace about 40%. Institutions rely on relative performance and preservation of capital and the Nasdaq does not appear the place to be at this point and time.
Support: 3100 – Marked by April and May lows.
Resistance: 3850 – Marked by horizontal resistance line extending from Jan-00.<<< |
