TOPPING PATTERNS?
By Harry Boxer, The Technical Trader (www.thetechtrader.com)
thetechtrader.com
We had some strong follow-through to last week’s gains with a very strong morning move on the Nasdaq 100. But at that point I noticed that the Dow and S&P were not really keeping pace, maybe some loss of momentum there. As a result, we turned sharply south in the morning and tested support initially successfully on the Nasdaq 100, but broke down beneath minor support on the S&P 500, testing secondary support on the S&P and Dow. When that was successful the market then rebounded and ran back up to retest the highs on the Nasdaq 100, nearly exactly double-topping just after the lunch hour.
When they couldn’t break through and make higher highs and when the S&P 500 and Dow made lower highs and failed to confirm Nasdaq once again, the market then turned south and sold off briskly for a couple hours before bouncing during the last hour. However, in the last 15 minutes the market after retesting resistance and failing to get through it, sold off into the close.
The Dow ended down 51 today, about 70 points off the high. The S&P 500 about 7 points off the high, down 3 ½. The Nasdaq 100 was off just a quarter but around 16 points off the high. The Nasdaq Composite was up 1, but some 15 points off the high as well.
So, they got intraday reverses today and after the long rally we had in the last few weeks, this could have been the beginning of a topping process. Certainly many of the technicals have been telegraphing it.
The technicals today were solid though to the upside by 18 to 14 on New York and a similar amount on Nasdaq. Advancing/declining volume was 7 to 6 positive on New York and 2 to 1 positive on Nasdaq, with a total of 1.85 billion traded on Nasdaq. New York was about 1.4 billion traded.
So it was heavy volume today, and the indexes seem to have reversed, but we need to get downside follow-through to confirm what looks like potential topping patterns. Also, today’s technicals remained positive, as mentioned previously, and I would expect to see them turn negative if a down side follow thru occurs.
The S&P 500 has been in kind of a head & shoulders top formation over the last day and a half. We’ll see if key support at the neckline at around 924-5 is broken tomorrow on the S&P 500. Current short-term support at around 1135 on the Nasdaq 100 then bigger support at around 1128-30 may be tested tomorrow as well and we’ll see what gives there.
Good trading!
Harry
Sam, BPNDX reached 76 today. It has been as high as 82 in the past but unless we are in a new Bull Market we are indeed in top like territory here. These charts I did on the BPNDX vs the SOX may shed some light:
investorshub.com
Thanks for posting that article here!
RtS |
