Saturday, November 29, 2014

COMPQ Nasdaq Composite Monthly Chart Overbot Rising Wedge Negative Divergence Price Extended

The central banker's stick-save the markets in mid-October. Price now ekes out higher highs but on far lower volume. The blue circles show distribution taking place with the smart money handing off shares to the dumb money. The Nasdaq violated the upper standard deviation band one year ago and has yet to return to the middle band, the 20-month MA at 4079 and rising, at a minimum, as well as the lower band at 3241 and rising.

Price is extended above the 20-month MA above the 50 above the 100 above the 200 requiring a mean reversion. The central bankers are powerful and the global collusion previously explained from the October low to present creates the thrust higher to new highs. AAPL creates the huge pump higher in Nasdaq Indexes. Trades are tripping over each other to buy Apple stock hyped each day in media. The Nasdaq 100, NDX, catapults vertically higher and about 45% of that move is solely due to Apple stock. It is not healthy for a market to be moving up on a limited number of stocks. AAPL and MSFT have driven much of the upside in tech stocks.

The projection is that a multi-year top is very near. The SPX and Dow are topping at now and likely will place their top anytime between now and February but the Nasdaq has more juice due to the huge momentum in Mr Softy and Apple. The momo has created a higher high for the MACD line which will want to see one more high after a pullback on the monthly basis. Thus, a jog move is likely for the Nazzy, a drop in December-January, then a move back up in December-February to create the multi-year top.

The collapses from rising wedges can be quite dramatic; very quick and painful if you choose to stay blindly long. The September-October pullback is child's play compared to the quick and substantial damage a collapse from a rising wedge can create. If you enjoyed the long rally higher and have substantial gains, it would be prudent to simply cash-out and take a few weeks or months off. If you are a nimble trader, you can cash-out now, look for the pull-back and then play a recovery move back up, and then short the next top which should serve as THE top for the tech-heavy Nasdaq. Watch for the negative MACD cross to form into the new year which will confirm the extended downside ahead that can last a few months or year or two ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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