T/A--Arthur Hill, Stockcharts.com, posted 8/4/00...
stockcharts.com
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Edited for ease of reading.
>>> Nasdaq 100--$NDX:
Commentary Posted: 4-Aug, 2000
Charts Updated: 05 August 2000
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4-Aug: Trading Position = Bear-Hold. The Nasdaq 100 ($NDX) is finding support around 3500, but weak momentum and money flow keep my position bearish.
Position Points:
With the recent firming around 3500, the possibility of a reaction rally increases. However, I would look for resistance around 3850. With resistance so close at hand and no real bullish set up in the indicators, a long position appears risky.
The break of support at 3600 remains the dominant feature of the chart. I harped for weeks how this support level took a month to form and was tested numerous times. I was surprised when it was broken so easily and must abide by the significance of this break.
AD Volume Statistics continue to weaken and show an acceleration of declining volume over advancing volume.
There is a potential parallel channel intact with support from the May trendline.
The Percentage Price Oscillator (PPO) formed a negative divergence, moved below its 9-day EMA and below zero. This bearish signal has not been erased yet and momentum favors the bear.
The 20-period Chaikin Money Flow has been below zero for 5 days now and close to -10% for 3 days. CMF(10) recently dipped below –20% and surpassed its April low.
Support: 3500 – Marked by recent support and trendline extending up from May.
Resistance: 3850 – Marked by horizontal support line extending from Jan-00.
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Weekly View:
4-Aug: Investing Position = Bear-Distribute. The Nasdaq 100 ($NDX) formed a lower high, broke short-term support and momentum is turning negative. With the prospects of a decline to around 2300 over the next few months, my position remains bearish.
Position Points:
It appears that a bump-and-run reversal (BARR) is forming and this could get real ugly. BARR was discovered by Tom Bulkowski and he originally referred to it as the bump-and-run formation, which would have had the acronym of BARF. After a little thought, he decided the investment community was not ready for such an acronym and decided on BARR. The advance from May-99 to Sept-99 acts as the lead-in phase of the pattern. The bump phase started with the run up from Oct-99 and continued as the index rolled over to form the Apr-00 low. According to the pattern, we are now beginning the run phase, which is typically down hill and accelerating. Support is usually found from the lows at the beginning of the formation.
Should a downward sloping parallel channel begin in this area, the lower end of the channel would mark support around 2300 in Oct-00.
April’s long black candlestick marked one week in which the index lost almost 1100 points. In the rally over the last 8 weeks, the index has not managed to recoup the loss.
With the sharp reversal, it appears that a lower high is in the process of forming. The index moved sideways for 4 weeks, advanced for 2 weeks and then wiped it all out in the last two weeks.
The Percentage Price Oscillator (PPO) formed a lower high and moved back into negative territory.
The price relative broke above its resistance line, but moved back through almost immediately. Even though the Nasdaq 100 ($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. 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.
- Arthur Hill<<< |
