Saturday, January 3, 2015

COMPQ Nasdaq Monthly Chart Overbot Rising Wedge Negative Divergence

The wait over the last few months for negative divergence to form across all indicators on the monthly chart (red lines) is over. Remember how the MACD line was still sloping higher wanting a higher high in price? It has occurred and the chart is now set up with universal neggie d. The price high in December comes with the MACD dead flat, which is neggie d but the bulls can be sneaky and squeeze out one more matching or higher high with a jog move down-up-down. The bear case is that the three monthly price highs for November, December and now January occur with universal negative divergence. Thus, the chart either fails here forward, or will weaken slightly and squeeze out a tiny additional high then collapse. So Q1 appears to be a significant multi-year top for the Nasdaq just like the other major indexes such as the SPX, Dow Industrials and the RUT small caps.

Of course there is one wild card and that is the ongoing global central banker collusion. Technical-wise, the six-year rally is over. The overbot conditions, rising wedge and neggie d will create a spankdown. The collapses from rising wedges can be quite dramatic. Watch for the MACD negative cross to confirm that the end is nigh.

Watch the 10-month MA at 4509 and rising as a key price level. The 12-month MA is 4467 and rising another important level that will likely come into play for the months ahead. If the 12-month MA fails, the stock market is moving into a potential crash position.

The chart is cooked and considering it is a monthly chart is likely identifying a significant multi-year top where the current highs will not be seen again for several years perhaps 2020 or later. Makes you rethink about all your long positions, doesn't it? If you enjoyed the long six-year rally, cashing out and simply letting your money sit idle for a few months is a very wise play. More adventurous traders can short the market moving forward.

The Nasdaq is near the all-time high above 5K during the dotcom bubble in 2000. Price has been printing new 14 and 14-1/2 year record highs for the last several months. The chart above has no reason to print another price high again technically; it is out of gas, however, if the central bankers pump, like the BOJ may pump to begin their year of trading on Monday, the bulls may be able to squeeze out a bit more upside juice. The main takeaway, however, is that the chart has peaked technically and it hints that even if the central banker global collusion continues, the 'emperor's will be exposed for not wearing any clothes' (Hans Christian Andersen).

The SPX and Dow monthly charts display the same dire technical analysis. The RUT monthly chart is also negatively diverged across its indicators although in the very near term it may have some sideways with an upward bias juice for January-February before price should roll over for the sustainable downside. The stars are aligning for the market bears in Q1.

The ECB meets on 1/22/15 and the Fed is on 1/28/15 so a scenario may develop with weakness in January but the sick Keynesian central bankers save the day at the end of the month to provide a month or two more of buoyancy. The central banker schtick is getting old and perhaps in 2015 confidence will be lost in the Keynesian golden goose. Ignoring the central banker modern-day money-changers, the chart above says the bears will growl in 2015. 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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