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Attached, are a few charts that on NDX (QQQ's). Although the signals are weak -
there are some indications that NDX will sell off from here.
chart 1 is a MACD on the NDX volatility index (VXN). It indicates that VXN
bottomed back in mid-August, and is trending up. The current pattern looks a
little like the early 2001 time frame where volatility kept picking up until a
decent bottom in the NDX was set in the April time frame.
chart 2 is a trend line analysis on NDX. The upper magenta line is the longer
term down trend line. The lower dark green line is the shorter term trend line.
As you can see, NDX hasn't quite been able to make it up to the shorter term
trend line.
chart 3 is the Nasdaq Composite, with new high/new low oscillator in the middle
sub chart, and an advance/decline oscillator in the bottom sub-chart. This
chart is conflicted: the NH/NL oscillator is at a sufficiently low level to be
consistent with a market bottom, but the A/D oscillator is showing a loss of
momentum at a fairly high level.
chart 4 is QQQ in the top sub chart, and an inverted/scaled value of VXN in the
second sub chart and a scaled ratio of VXN to the ATR in the bottom sub chart.
This shows VXN to be in the middle of its normal range (middle sub chart), but
in an overall downtrend; this indicates that QQQ can still break its recent
lows. The bottom chart shows that VXN is still relatively pricey compared to
recent volatility. This condition typically precedes big moves in the QQQ, and
recently those big moves have been to the downside.
Netting things out: the technical indicators are mixed, but weigh in favor of a
continuation in the downtrend. I'd appreciate hearing others' opinions on the
current market (NDX) outlook.
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Attachment:
Description: "vxn_levels_20020913.gif"
Attachment:
Description: "nasd_nhnl_ad_20020913.gif"
Attachment:
Description: "ndx_trend_20020913.gif"
Attachment:
Description: "vxn_macd_20020913.gif"
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