Well, for bullish scenarios, here's an NDX monthly chart showing a rough re-trace schedule:
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The high of 1155 NDX was a .382 re-trace of the drop from the 1734 NDX Dec. 2001 high to the October 10, 2002 795 NDX low.
The next logical step would be either a double top at 1155 or a 50% re-trace to NDX 1264.
The double top does not work well, as the COMP is lagging on this advance, so the only logical target that works is 1264 NDX or above.
NDX 1307 is an A=C target for the NDX, so anywhere from 1264 to 1307 would work for an upper limit for this ramp.
Using the COMP, the 1521 high was a .382 re-trace of the drop from 2098 to 1108. The .50 re-trace is 1603. That lines up with the NDX pretty decent. An A=C is 1666 COMP, so anywhere from 1603 to 1666 would work.
This is if we have a bullish ramp at work here. We need to see how this top resolves and what kind of pullback we get to get a handle on it.
If we are targeting the COMP gap from 1401-1420 like it appears (why stop 9-points short?), we'd have an NDX double top at around 1100 NDX and a COMP gap fill at a level much below the January top.
A .382 re-trace of such a run would take us to the NDX 1042 level, which is near the 1043 pivot high on Friday and the lower part of the old gap. That's a place where shorts and longs will be confused.
From what I can see, daily RSI readings at the current level have normally resulted in .382 re-traces off a top, and the local top should be about 25 NDX points above where we're at right now according to normal RSI and ADX progressions.
The divergences created since the NDX crossed 1030 last Thursday continue to manifest themselves, and the only way I can see them resolved is at higher levels above the Dec. highs.
This does not line up with what I was expecting, but you can't let what you expect interfere with your trading.
My recollection in watching the market has been that whatever the NDX does, the COMP usually does sooner or later. The NDX led on the moves down, and it is leading on the way up also.
The NDX / COMP divergences need to be respected, as they could come into play in the near future. |
