Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Thursday, August 17, 2006

NASDAQ creating Trading Opportunities

The NASDAQ has reached level one (38.2%) of the Fibonacci retracements with a 4.57% advance this week. The index may take a breather since we have made gains the past three days with a gap-up yesterday. However, if the strength in the market is true, the 50% retracement level should be the next target for the NASDAQ after a slight breather.



The 50% retracement level (2,195) is where I can see the index hitting stronger resistance since several factors come into play. The first is the actual Fibonacci retracement itself, the former breakdown from late May to early June and the longer term resistance and support line near 2,200 which dates back to the start of 2005.

If resistance is met, a short term short play may be in store for the NASDAQ; take a look at the QQQQ for a possible option play. You could also play the SPY as it is moving in stride with the NASDAQ this week.



Finally, the percentage of stocks above the 50-d m.a. on the S&P 500 have reached their highest levels in more than four months as indicated on the chart below. This market move is showing strength as several secondary indicators are confirming such as the stocks above their 50-d m.a., the NH-NL ratio and the action among individual stocks.

Keep in mind that September is the poorest performing month in recent history so a reversal is not out of the question. Protect your positions and don’t get emotional with this recent burst of strength. It can turn on a dime and you must be ready to act. Remember, the NASDAQ is still trading below its 200-day moving average (a negative in my book for a sustainable rally).



Piranha

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2 Comments:

At 5:51 PM, Blogger Yaser Anwar said...

Chris,

The weekly TRIN & ARMS indexes are suggesting the market has got a little ahead of itself due to excessive short-covering on PPI CPI. However we could expect the NASD 100 to cool of a little tomorrow as options expiration creates alot of volatility.

After-hours, Dell reported its profit fell 51% amid price discounting and slower PC demand.
The company also said the Securities & Exchange Commission has opened an informal investigation into its revenue recognition practices.

This could potentially weakness the NASD tomorrow as well.

As usual, great analysis by you of the nasd. thanks alot

 
At 11:03 PM, Blogger Yaser Anwar said...

Forgot to add,

The major indicies are all showing spinning tops & hitting top level of bollinger bands.

If you notice, there has been negative divergence when it comes to OBV (heading lower) and market trending up

 

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