Justa, in wondering about the significance of the recent nasdaq rally, I looked thru a number of daily charts on stockcharts.com for the predominant companies in the nasdaq to see what their individual charts look like, and get a sense of how they might fit together in a composite to form the nasdaq chart. I would categorize them as follows:
Head and shoulders top with decline below neck line and reaction: JDSU, LU, NT, CIEN, JNPR, QCOM, INTC, SUNW, CSCO, BRCD
Head and shoulders or rounded top with decline and reaction: DELL, MOT, NOK, NTAP, BRCD, IBM
Double top and decline with reaction: BRCM
Rounded top with no reaction: EMLX
Perhaps AMAT looks sort of healthy.
Most of these charts look about as bad as they have looked since early 2001. It is hard to see how they could signify anything but the current rally being a reaction preceding the continuation of these bearish charts. In order for the nasdaq to go to 2050-2100, these charts would need to rise back to the top of the head and shoulders, which seems very unlikely.
If one looks at a weekly chart, an inverted head and shoulders might be forming for some of these, such as amat, csco, and ntap.
I would be interested to hear how others would interpret these charts.
According to Edwards and Magee, a good shorting point in the chart is at the top of the reaction to a head and shoulders or double top....is it time to go short?
Robin |
