COMPQ Nasdaq Composite Weekly Chart Quasimodo H&S Overbot Negative Divergence

The Nasdaq comes up to test the prior highs in September. The head and shoulders pattern is in jeopardy right now, but for the weekend, we will call it a Quasimodo H&S with the head and right shoulder at the same level. This top at 3200, the head, with neck line at 2800-ish, would target the 2350-ish support if 2800 fails. The left shoulder top in early 2012 came with overbot conditions, a red rising wedge, and negative divergence with stochastics and the histogram, creating the spank down, but the RSI, MACD line and money flow (green lines) wanted to see another higher high. The higher high occurs with the head at 3200 in September 2012. The red lines show firm negative divergence across the board identifying a significant top, which occurred. The interesting thing is that universal negative divergence like that will create a continual move lower subsequently with a trend change to the down side. Once the indicators are all negatively diverged, price no longer has any upside juice, it is exhausted.

However, the wild card in the deck has Chairman Bernanke's picture on it, dare say it is the joker card, and this allows artificial market action through money-pumping. Thus, the money sloshing around in bank vaults needs to bloat something up and the COMPQ floats higher to match the September highs. The market is a drug addict, right now enjoying the latest QE3/QE4/OMT crack cocaine high, but the effects are wearing off. The high in price now comes with more negative divergence. The markets are not healthy, they are a propped up drunk that wants to lay down but a wannabe good Samaritan is helping him stand and providing another bottle of Mad Dog (wine). You know how that ends.

Projection is a market top here and selling to proceed for the weeks ahead. The money flow is showing some near-term momo so price will likely jog before rolling over. 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.