FEB 13 INDEX UPDATE
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Have been a bit under the weather so will have to make it quick.
In the past I have mentioned that I am still longer-term bearish where lower lows could be achieved with possible downside target around 1800 on the NDX. Im now more bearish for the longer-term, not that it will go below 1800 just that I feel the chances of making new lows down the road are growing.
My short-term view basicly remains the same, in that we should still have some sort of a bounce but this bounce may be small and the upside target is around 2500 on the NDX, maximum 2700 if it gets that high.
Two negatives which are hinting that the NAZ/NDX could continue straight down from here are the BEARISH ENGULFING PATTERNs on the NAZ/NDX, and the possible NEGATED CLASS 1 BUY SIGNALs. However, Im still leaning more towards a bounce in light of the fair/plateauing NAZ NEW HIGHs/NEW LOWs.
For a while already I have been talking about the NEW HIGHs/LOWs on the NAZ, and how it is a positive divergence, unless it starts to deteriorate. Well, now I feel that that NAZ NEW HIGHs/LOWs most likely will deteriorate and that it will be the KEY to the next major down-leg which some consider to be PHASE III in the NAZ BEAR market.
Its not a big change in my longer-term view, just a clearer picture on how it may occur. The reason why I believe that the NAZ NEW HIGHs/LOWs may deteriorate is because of the RUT. The connection between the NAZ NEW HIGHs/LOWs and the RUT is that the NEW HIGHs/LOWs are not deteriorating since the RUT(small caps) and the BTK(biotechs) are performing better than the NAZ, for now. IF you check the charts on the RUT there is a RISING WEDGE forming. Unfortunately I cant check the volume on the RUT. The norm would be a break to the downside, and with a downside break the NAZ NEW HIGHs/LOWs should also drops. Whether the RUT's RISING WEDGE breaks first or the NAZ NEW HIGHs/LOWs decline first, I dont know, but they should eventually move together. I did not say 100% that the WEDGE would break to the downside but the probability is with a downside break, but there is still a slight chance for an upside break(very slight).
In line with this, I mentioned about a week or so ago that the NAZ NEW HIGHs/LOWs were plateauing and at that time I did not know if it was plateauing for the next decline or basing for the next run up. Now with the WEDGE on the RUT, I feel that it is plateauing for the next decline.
So the KEY to the next major down-wave in the NAZ(PHASE III) would be the downside break in the RUT's RISING WEDGE along with deteriorating NAZ NEW HIGHs/LOWs. Also deterioration in the BTK.
For the shorter-term the RUT has a small BULLISH FLAG within the larger BEARISH WEDGE, so this BULLISH FLAG should move the RUT upwards towards the upper trendline of the LARGER BEARISH WEDGE. So Im still leaning towards a relatively small rally in the NAZ/NDX/RUT, before the bigger selloff. As for the timing of the break in the RUT's BEARISH WEDGE, Im leaning towards the next short-term upswing, maximum 1 more complete short-term cycle. In terms of weeks, as early as next week to 4-5 weeks from now.
Will go into more detail later. |
