• 13 hours Can Toyota's Hydrogen Car Take On Tesla?
  • 2 days Why Universal Basic Income Won't Work
  • 2 days Is This The Real Golden State?
  • 3 days Blockchain Firm Pushes For Ethical Mining
  • 3 days America’s Working Class Are Footing All The Bills
  • 3 days Market Volatility Sends Investors Scrambling Into This Asset Class
  • 4 days How Much Energy Would It Take To Power The Death Star?
  • 4 days A Tweet About Hong Kong Could Cost The NBA $4 Billion
  • 4 days World's Largest Miner Doubles Down On Renewables
  • 5 days Nasdaq Cracks Down On Small Chinese IPOs
  • 5 days Is There Any Reason To Be Bullish About Netflix?
  • 5 days Precious Metals See Record Inflows As Investors Hedge Against Teetering Economy
  • 6 days NYU Professor: Tesla Could Lose 80% Of Its Value
  • 6 days Uber To Offer On Demand Employment
  • 6 days SoftBank Reeling After Questionable WeWork Investment
  • 7 days Opportunity Arises In The Democratic Republic Of Congo
  • 8 days Peter Thiel’s Promised Land For Intellectual Troublemakers
  • 9 days Why Gold Stocks Are Drifting Lower
  • 9 days Copper Miners Feel The Squeeze As Prices Slip Once Again
  • 10 days Uncovering The Universe’s Biggest Secrets
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…




My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on…

Contact Author

  1. Home
  2. Markets
  3. Other

NDX: The Decline is Jeopardizing a Bullish Outcome

NDX is approaching the February low.

As discussed in weekly update on April 6, this area is a twofold critical since it coincides with the 10 mma.

If this support does not hold we can see that, in the monthly time frame, there is not a clear obstacle that could prevent a drop towards the next major support zone located at the trend line support in force since the 2009 lows and the 0.5 retracement of the up leg from the November 2012 higher low. We are talking about a 10% decline.

Undoubtedly such an outcome would seriously jeopardize the SPX short-term bullish scenario of a potential pending last up leg to a new ATH, which would conclude with a Double Zig Zag or a Triple Zig Zag the 5 years advance from the March 2009 low.

NDX Monthly Chart
Larger Image

In the weekly chart we can see that above the "major" trend line from the 2009 lows we have a potential support zone located in the range 3280 - 3250 (Trend line from the November 2012 low and the 0.382 retracement of the advance from the November 2012 low to the March high). This retracement could still be considered a pullback within the longer time frame pattern, which probably would not endanger the intermediate up-trend, notwithstanding this outcome would suggest further weakness for the equity market as a whole.

It is a bit troublesome though that even if the February low holds, in the following rebound if bulls do not reclaim the March 14 low there is a latent risk of that a failed rally could develop the right shoulder of a H&S. This theoretical H&S would have a target at the Trend Line in force since the 2009 lows.

Another bearish issue is the loss of the 27 wma.

It seems probable that barring a monster rally the next rebound (until proven otherwise) will establish a lower high.

For the shorter-time frame last week Inverted Hammer is suggesting selling exhaustion hence this week odds favour a bottoming attempt.

NDX Weekly Chart
Larger Image

In the daily chart we can see that despite the sharp selloff from the March 11 high the pattern is corrective. So far we have a 7-wave overlapping structure, however it is a fallacy to give for granted that this corrective pattern cannot grow in size (Maybe by establishing the wave A of a larger Zig Zag down).

Hence we cannot know beforehand if price will establish a new swing bottom (In which case bulls will have to reclaim the 50 dma) or a tradable bottom that will open the door to a large rebound that eventually will fail by establishing a lower high.

In the chart we have 4 clear price levels where an oversold rebound can fail and at the same time we can see that as long as the 50 dma is not reclaimed the risk remain to the downside.

For the immediate time Friday's doji following Thursday's sharp selloff is suggesting probable selling exhaustion hence the odds favour a rebound attempt.

NDX Daily Chart
Larger Image

Shutting down the computers. I will be back on April 21.


Back to homepage

Leave a comment

Leave a comment