LT , after studying the NDX, the NASDAQ percent of stocks above the 50 day MA and the Advance - Decline Volume charts, I came up with the opinion that tm could be the left shoulder of a double top. In addition to that, support at 1363 could fail unless there is an overall increase in volume. I can't say for certain because I don't know! LOL!!! :) However, here are some things to look for.
The vertical red dashed lines are located at days where the close was positive and the volume was higher than the following positive day. Example: yd was 826M and td was 719M. The black horizontal lines are support at 1363 and resistance at 1450. These numbers come from Mr. Ted Burge. (link below - chart # 2B on pg 2)
The red arrows are located where the PPO lines have crossed to the downside. Note that these days do not have a dashed line as the volume was increasing over the previous few days. I think this represents 'selling into an advance' where the extra volume comes from the sellers. So this gives us a set of circumstances to watch for in calling a significant top.
Note that yd's dashed line passes through wide open PPO lines that are ascending with increasing bar size. The last time on this chart where that occurred was on Apr 2nd (far left side of chart). Apr 5th was a high. There are a couple of other similarities regarding the ADX lines as you can see. That being the case I used this wedge to calculate the 50% retracement of what may turn out to be the current wedge. It all depends on tm and weather the NDX both opens and closes below today's high. Looks like lower volume and a red close would be even more convincing.
Here is the math:
Apr 5th high 1508 subtract Mar 24th low 1368 = 140. 140/2 = 70. 1508 high subtact 70 = 1438. The low on Apr 21st was 1434. Very close to a 50% retracement.
Sep 14th high 1436 subtract Aug 13th low 1301 = 135. 135/2 = 67.5. 1436 high subtract 67.5 = projected 50% retracement at 1368.5.
Now what happens if the NDX does fall to Mr. Ted Burges' support, will it do a 'dead cat bounce' and then move down to the next support at 1310? Or will it find support in the 1363 area and then move back up towards resistance at 1450? At this point I would say the NDX moves down to 1310 or lower. I'll have a better idea in a few weeks.
Although the current rally has looked good with the bullish percent PnF and the number of NASDAQ stocks above their 50 MA, the Advance - Decline Volume has not kept pace. I think this indicates internal weakness in the NASDAQ market.
All of the above is just the opinion of a market student. I would greatly appreciate comment. Good Skill to all.
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