<font color=blue>2001JUN01 Market Commentary and Analysis
trendVUE Market Commentary
Last week we alerted readers to the fact that the reversal patterns seen on the daily charts of the NASDAQ 100 index and the S&P 500 index were in a “do or die” position. The reason for this was because on the weekly charts, both these averages were reaching resistance overhead. The question was whether the short-term reversal patterns would have enough power to overcome this resistance. The answer, it seems, is “not on the first try”.
The NASDAQ 100 Index
On the weekly chart, we can easily picked out resistance at the 20-week moving average as well at the January low.
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Given that this index was taking “too long” to take off, after the formation of the right shoulder, the probability of it being a successful breakout was diminished. In fact, in the context of the long-term downtrend, we showed readers that another possibility would be that this entire move from the April lows is a rising wedge. This week, the lower boundary of the wedge was broken, and should the NDX bounce, we will be looking first for sellers overhead at the 20-day EMA just below 1900. The backside of the broken lower boundary of the pattern also serves as resistance.
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The S&P 500 Index
Last week, we pointed out that the SPX had made at 50% retracement of the downtrend from the all time highs.
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On the daily chart, the uptrend line was also broken. On any bounce, we will see if sellers show up between here and 1280. A convenient point of support below is the 50-day moving average in the 1220 area.
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Have a great weekend.
Teresa |
