Doug, on the NDX, at the risk of having some NDX-aficionado come down on me, I've never noticed a sustained divergence of any great importance to my own trading between the NDX and the COMP, and, since the latter is more widely followed, I tend to grant larger significance to formations, support levels, etc., on the COMP, and am otherwise more likely to turn to bellwether issues than to the NDX itself. So my outlook on the NDX is the same as on the COMP (until someone points out a reason why it shouldn't be): Still a long, long way from breaking the big downtrend...
That said, I tend to agree with LG that a trading rally from recent lows is more likely than another major rollover to the bottom of the post-Labor Day channel (or worse), but I don't feel confident enough about that to switch back from swing-trading to initiation of longer-term positions. If the COMP hadn't done such a terrible job of late at holding significant lows and base-building, that would be my prediction here, with the range more or less defined by the rally day until further notice (major rupture of high or low). Really, there was reason to believe that the late Dec low "should" have held, but it seems a things that should happen haven't. In the same way, Last week's low "should" hold, too, though before the Fed announcement it was looking like a test back to '98 support levels at least was in store....
I see we've just about erased all of the Fed rally... and it just started raining in Cali... gloomy. Maybe this dispiriting process is just what's needed, and LG's theory about institutions wanting a re-trace so as to get more fully on board on an impending rally isn't a bad one: In a bear market I think especially, I wouldn't think anyone on top of the action minds making the same money over and over. Your own theory about entrapment might also make sense, though both your theory and LG's could be looked at as more conspiratorial/ instrumental (i.e., that SOMEONE is in control) ways of saying that the tension between negative economic indicators/ earnings revisions/ telco debt & bandwidth glut /energy uncertainty / loss of confidence/ inevitable reversion after greatest Bull run, etc., etc., (the whole bear case) on the one hand and speculation and l-t investment looking to Fed-induced re-acceleration on the other is more likely to favor the former until the Fed has really acted again (restored confidence), and the larger picture has clarified more positively - resulting in a tug-of-war market with a downward bias. |
