NASDAQ 2315 Again

Two months ago I noted that the 2315 level for the NASDAQ Composite Index had figured prominently in several important gaps and served as a critical support and resistance level for the index going back to mid-January.

In range-bound markets – which is what we are in for now until we get a decisive move up or down – these important support and resistance levels end up being revisited on a quite a few occasions and ultimately prove to be an important measuring stick for the strength of subsequent market action.

Looking at the three month chart (with 60 minute bars) below, in the past two months the 2315 level has played an important role in two new gaps, one from the end of February and another at the beginning of April. The end of February gap down served as a ceiling for price action for almost a month, while the April 1^st gap up has been the floor for price movements over the course of the past two weeks. Today’s sharp drop tested the gap and the corresponding 2315 level. So far, that test of support has held. As long as 2315 continues to hold, the markets should continue to consolidate and move up from current levels, but should 2315 be breached – and the gap down to 2290 be closed – expect emboldened shorts and panicky longs to put the 2155 low back in to play.

NASDAQ 2315-2320

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 25^th. 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 22^nd and 23^rd turn out to be a bottom.