Courtesy of Declan Fallon
The Nasdaq has had a very good run of form of late, but it hasn’t really changed the breadth picture a great deal. Bulls will look to the new swing low which will be confirmed if the Nasdaq Summation Index crosses above its 5-day EMA, and other breadth indicators hold their 5-day EMA. Bears will see a dominant bearish trend, particularly in the Percentage of Stocks above the 50-day MA, and suggest the current run is nothing more than a relief rally.
From a trading perspective, you need to protect yourself against false breakouts. Because of the vulnerability of the breadth metrics it will be important 3,270 holds as support (for the Nasdaq). A loss of 3,168 would confirm a ‘bull trap’.
The Nasdaq 100 shows the battleground nicely. Horizontal support at 2,825 is key.
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.
