In the previous post, I said that a break of 990 would be needed for me to entertain the notion of a short term trend change. 990 was pierced briefly today and recaptured by upward forces of the market.
I still cannot rule out the possibility of another short term high. As long as index stays above 990, it has the chance of working off its short term oversold readings, luring in some shorts, gathering some energy and launch an assault on another high. I have drawn a blue channel on the chart above just in case index decides to turn around from around here.
This is a 15-minute chart
On August 7 I pointed to an area on the chart and said that it should act as a buffer zone. It so far has held. Now, I should pay attention to the down channel and the 990 level to detect any signs of a turn to the upside.
Nas100 has been leading the move down. Today, it lost less than S&P in percentage terms. Is it a sign of at least a pause and a bounce, or a resumption of the rally? I am not sure, we just have to wait and see while observing key levels
Speaking of key levels, we have discussed the 1580-1600 area on Nas100 Sep. Futures
This a 15-minute chart
If you remember the maroon arrows from the previous post, they all pointed to trade initiation potentials on the long side around 1600. Today, price just cut through 1600 as if it was not there. Later in the afternoon, 1600 area acted as resistance to the bounce off the day’s lows.
Here are a couple of counts I am following for NDX futures at the moment
Like S&P, I cannot say for sure if the rally is over or not. Price is still in the 1580-1600 band, and can make another run up.
On a daily frame, Nas100 looks a bit weak.
The technicals look like they are about to roll over. On the other hand, the volume these past two days has been light. A break of 1580-1600 is needed to perhaps get the ball rolling down with some momentum.
There is support from MAs and the 1515 level below.
For the day, volume on S&P was below average but more than yesterday. Breadth was negative
There is some short term divergence, and serious overbought readings on the above chart above.
The broadening pattern we have been discussing is still active. So is the Inv. H&S from March lows
That is a nasty looking candle off the upper trend line of the broadening pattern. Still, your guess is as good as mine as to the outcome. I just need to take it one level at a time.
Tomorrow's a Fed Show day, so, I expect some buffoonery and price gymnastics.
Let’s Wrap Up:
Index has corrected from recent highs but is still above 990.
Bulls own the market. It is their ball to drop. Bears seem weak (if not dead) and incapable of inflicting lasting damage. Watch for signs of distribution. So far, it’s been accumulation and consolidation. We may have arguably had a distribution day today.
A close below 990 is needed to perhaps change the short term trend. Otherwise, index may attempt another high.
Mid-term, index appears in opposing patterns, an Inv H&S and a megaphone, broadening top, attention to support and resistance levels, and price action with respect to MA alignment is advised.
Short term trend is up (a close below 990 may change that). Mid-term trend is up. Long term trend is down.
Index has gone through several levels of resistance with relative ease. They have all become support.
Resistance is 1018, and 1041. Support is 990, 984, 961 pivot (a long term level from 2003), 955 (top of the 875-955 range), 935 (Jan 2009 top, July 1 peak), 923-928 (tested multiple times), 910-915, 908 (55 EMA), 875-885 (base of a W bottom) and the frequently contested 850.
Have a Nice Day!