COMPQ Nasdaq Composite Daily Chart H&S Patterns

The Nazzy has a couple of H&S (head and shoulders) patterns in play with price teasing the necklines. The red H&S has a head at 5343 and neck at 5133 which failed yesterday. The difference is 210 points (5343-5133) so the lower target is 4923 (5133-210) now that the neckline is ruptured. For the blue H&S, the head at 5343 and neck at 5100 target 4857. Note that price has not yet ruptured the blue neck line so the 5100 level is key.

The 100-day MA is 5138. The 150-day MA is 5044. So watch this major 5100-5138 support/resistance area closely. If 5100 fails, price is going to 5044. So watch 5100 and 5044 on the downside and 5133 and 5138 on the topside. Exits from these prices show the trend forward.

The RSI and MACD line are weak and bleak wanting to see lower lows after any bounce occurs in this daily time frame. Money flow is leveling off flat so that is positive divergence. Ditto the histogram. The stoch's are oversold agreeable to see a bounce in price.

Check out the steady ramp up in selling volume as investors throw stocks overboard unwilling to stick around for a potential big ride lower. The pink box shows that the COMPQ price was in a strong uptrend in late July, through August Into September where it petered out (ADX black line drops under 25-ish). As stocks tumble over the last few days the ADX line is ramping higher. If the ADX line travels into the pink box at 25-ish and higher the market bulls are toast. If the ADX rolls back over to the downside it will signal more trendless sideways choppy slop.

Looks like the indicators are agreeable to a bounce move in this weekly time frame but the RSI and MACD want price to then roll back over and head lower again to print lower lows later this month or in December. If price bounces from here, it may form a new right shoulder for the H&S patterns testing the underside of the 20-day and 50-day MA's. The 20 MA stabbing down thorough the 50-day MA is a negative signal. Note that the H&S patterns above show a head that is a double top, perhaps it is a two-headed monster. 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.

Note Added 7:47 PM: COMPQ tumbles -0.9% lower today to 5058. LOD 5053. The 5100 support failed and price tumbled almost 50 points lower. The 150-day MA support is in play. The necklines have failed for the H&S's so the lower targets are in play. The necklines are very important S/R levels so it would be prudent to expect a back kiss of one or both levels, the price will then likely resume the downward move after the back test.