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Short Term (lasts a few hours to a few days): The NASDAQ 100 index today recouped a small fraction of the significant losses it sustained this week. The S&P 500 and the Dow remained essentially range-bound over the past four sessions and closed almost unchanged for the week. Although we see a potential for the NASDAQ 100 in particular to make a short-term up-move (perhaps limited to an intraday bounce), we advise against the establishing of new long positions at this time. We believe the market is very close to a turning point, switching from its long-enduring midterm uptrend into a new midterm downtrend. We think that even the Dow and the S&P 500 are ready to start a downswing within the next few sessions. 15-day charts of the major indexes indicate a split market: Whereas the NASDAQ 100 index is showing two fairly strong buying surges on January 18 and 19, the Dow and the SP 500 show a much more lopsided surplus of selling volume. Conceivably, this could lead to the NASDAQ 100 outperforming the other indexes to the upside over the short-term; however, we still do not recommend new long positions for the NASDAQ 100, as this index may already be in a new midterm downtrend. Higher timeframe charts of all the major indexes continue to show a good potential for a new midterm downtrend.
(taken from a free mkt letter)
Ben
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