NDX Nasdaq 100
Weekly Chart:
Stochastics gave a SELL signal in Jan '06. The Stochastics have headed lower, but not into the oversold area.
Bollinger bands are starting to pinch. The index has pulled away from the upper band and is resting in the middle of the bands. The index should remain range bound, but make a move to one band or the other.
Then MACD gave a SELL signal from a high in Jan '04. The two major rallies to new 52 week highs resulted in lower highs in the MACD. The MACD gae a SELL in Jan '06 from a lower high. This divergence is BEARISH.
RSI has met resistance by the 70 area. The RSI tops and bottoms mirror the NDX, but higher highs and higher lows are lacking. This is NEUTRAL.
The NDX choppy advance since the lows in '04 make it tough to be certain about Elliott wave count. The rally out of the March '03 lows haas been a WAVE B so far. Is it a zigzag, double zigzag, or a complex WXY?
Daily Chart:
Stochastics are re-entering the overbought area. The move out of the oversold rea has several false buy and sell signals.
Bollinger bands have pinched. The NDX penetrated the upper band on Friday and was repelled.
MACD gave a SELL signal in Nov '05. Since then the MACD has made lower highs and lower lows. The is a divergence with the NDX high in Jan '06 and a "confirmation" of a real lower high in March '06. The MACD is in negative territory which is bearish. The MACD is giving bearish signals.
RSI is very similar to the MACD. The RSI still has room to fall before oversold conditions register. BEARISH
A possible head and shoulder pattern has developed over the last 4 months. 1633 is the neckline.
The past 3-4 weeks the NDX has spent a good deal of time below the 50 week average. This is a divergence with the SPX; this is BEARISH.
The market is even choppy at the daily scope. Elliott wave analysis is a challenge the best timeframe is year to date. Elliott waves over the last 2 months show a motive wave up, triangle or double zigzag down, and a triangle or ending diagonal up. The combination of triangle down and ending diagonal up is the worst case since WAVE C in the Bear market starts this week instead of later. A double zigzag down and triangle up implies a short term selloff followed by a rally challenging 52 week highs Either way, the market should move down the next few weeks.
Both weekly and daily charts indicate the upside is limited and the strong potential for selling over the next month or two is relatively high.
