If you have been watching the NASDAQ Composite Index for the last few weeks, it is likely that you have paid close attention the area around 2315-2320.
I usually don’t talk about basic support and resistance levels in the major indices, largely because guys like TraderMike and a host of others cover those bases nicely. Given all the interest associated with whether the market has bottomed or will bottom soon, I chose to focus on 2320 in The Game Is Afoot back on January 25th. With three weeks of hindsight, this has turned out to be an even more critical level than I had expected it would be.
In the chart below, which shows 60 minute bars over the course of the past month, the 2315-2320 area has defined two important gaps and repeated instances of critical support and resistance. If today’s rally continues, it is possible that this level will not be tested going forward; however, if it does get tested again, expect the battle for 2315 to be one of the most important skirmishes that will determine whether the lows of January 22nd and 23rd turn out to be a bottom.
Your expectation posted Monday that we might have a bounce off the lows (based on the NASI) was quite precient.
ReplyDeleteI don't follow the $COMPQ much -- I look at the $MNX/$NDX more because it has options, whereas the NASDAQ composite does not -- but focusing on the top 100 caused me to miss that the overall NASDAQ is outperforming the top stocks since the late January 2008 low. I just added the $COMP to my ToS indices list so I can keep a closer eye on it as a broad market indicator.
The resistance level I'm monitoring is the 1360-1362 level on the SPX. On one of my 15 min. charts it looked like the SPX gapped down to around that level on the Feb 5th open, and there have been several (failed) attempts yesterday and today to breach 1360 and fill the gap.
Another factor that made me feel less sanguine about the market yesterday was that nearly all of the stocks on your "Overripe High-Flyers" index were down at the close (along with the $MNX/$NDX)... otoh, they all seem to be up today, so perhaps it's premature for me to weigh in as either a bull or a bear at this point.
tnt
Sorry, that should be prescient.
ReplyDeleteAny way to add a spell-check function to blogger? lol :)
tnt
Hmmm, seems to have broken thru 1360 shortly after I posted last time.... I guess I'll have to go intermediate-term bullish if we close above 1360, depending of course on continuing to make higher highs and lows. Expect resistance around 1395 or so, but breaching that level would put me solidly in the bull's camp.
ReplyDeleteDropped back hard below 1360-1362 on the SPX, so I'm counting it as a failure. :-(
ReplyDeleteWe may see a test of your NASDAQ 2315-2320 level tomorrow.
Most importantly, Happy Valentine's Day to all! :-)