The Technical Outlook For The NAS 100

$QQQ

Following the breakdown of long-term Bullish trends in August on the major market indices, and the corresponding sell-off, the markets have bounced back as the sellers took profit and opportunistic bulls did some bargain hunting.

The Big Q: Now that we have seen a pullback, is it time for stocks to head lower once more?

Among the major US indices, the NAS 100 looks the most technically friendly, almost textbook perfect.

If it is to resume its downward trend, it would do so from around these marks.

As can be seen on the daily below, the index ran into Key resistance around 4440 following an initial rally on the back of the FOMC decision last Thursday.

Here, a Bearish trend line, the 50-Day MA and previous support all acted as stiff resistance, leading to a sharp re-treat.

The reversal helped to create a Doji-like candle on the daily, which points to indecision and a potential sell-off from around these-technically important marks. The body of Thursday’s candle held below the 200-Day MA, another Bearish signal.

Should the index retreat in here as the chart suggests, the potential support mark that need to be taken out is around 4345, which is resistance turned support.

Below here, there are not much further short-term supports seen until the 38.2% Fibo retracement level at 4242. But the potential sell-off could go a lot further and who knows may even revisit and indeed break last month’s lows.

This Bearish setup would become invalid on a rally and closing break above the trend line. If this happens, the NAS 100 may then stage a rally to at least the 78.6% Fibo mark at 4525, before heading towards 4694 next.

Monday, 21 September the NAS 100 closed at 4,828.96 +1.73 or 0.04% (flat to unchanged) in New York.

Stay tuned…

HeffX-LTN

Paul Ebeling