Monday, March 2, 2015

COMPQ Nasdaq Composite Monthly Chart Overbot Negative Divergence Developing

The previous SPX monthly chart (type symbols in the search box at the right margin to bring up a chart of interest) is negatively diverged across all indicators and the Dow Industrials (INDU), is the same set up. So the S&P 500 and Dow are content in rolling over going forward and calling the current levels a multi-year top. The Russell 2000 small caps monthly chart is also in the same camp with SPX and INDU willing to roll over and die.

And then there's the tech and biotech heavy Nasdaq that hits 5000 today smacking the bears in the face. The central bankers are powerful and the latest goose to the stock market is by the PBOC (China) with a rate cut over the weekend. The NXPI and FSL merger announced this morning creates joy in tech land as well. The main thrust higher is due to the largest company in the world; Apple. Retail traders are caught up in the Apple hype and have been buying AAPL regardless of price since November. This thrust higher launches the COMPQ above 5K.

The red lines show the rising wedge, overbot conditions and neggie d  that created the December-January spank down but note that pesky MACD line that continued to slope higher long and strong. After any pull back it wanted the Nasdaq price to come back up one more time; and it did in February. So the higher high in price now, both in February and now a higher high in March, the indicators are all negatively diverged, except the pesky MACD line. If markets collapse this month, the MACD line may drop negative to lock in current highs as the multi-year highs, however, the more expected path would be a down up down pattern. The green circle shows the MACD remaining long and strong (sloping higher). The other indicators are all negatively diverged (sloping lower) with the higher high in price so a spank down should occur this month, however, the strength from the MACD wants price to come up one more time, then the index should roll over with a multi-year top in place.

Price is far extended above the moving averages needing a mean reversion lower. The selling volume in Dec-Jan was lower than the buying volume in October (which was caused by obscene global banker intervention that stopped a market crash) so that provided a feather in the bulls cap. The bears needed to push lower harder. So price mounts the big up in February for a new high and now a new 15-year high to begin March. The buying volume is weaker than both December and January so that is a feather in the bears cap. The bulls needed to push higher harder.

Projection is for the Nasdaq to sell off in March-April, then come back up to the current highs above 5K again in April-May then roll over with a multi-year top printing. The SPX and Dow may roll over at any time and do not have a reason to print higher highs so their negativity may drag the Nasdaq lower sooner rather than later as well as limit the recovery move higher for the Nasdaq. The Nasdaq has a six-year rising wedge pattern which is very ominous since the collapses from rising wedges can be quite dramatic. The projection is that the major indexes top out at anytime from now through May printing a multi-year top. Obviously, if AAPL begins dropping in force it will drag the indexes lower just as it dragged the indexes higher the last few months. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.