NASDAQ 100 Index (NDX)

Is the NASDAQ 100 Index Ready to Begin A Correction?

Posted in NASDAQ 100 Index (NDX) on December 19th, 2013 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

When looking at the weekly chart of the NASDAQ 100 Index (NDX) it is easy to see that it is now testing key trend line resistance at the 3,524 level accompanied by overbought conditions. In particular, weekly stochastic studies are in a very overbought condition with %D and %K readings of nearly 97 and 94.35 respectively. And while overbought conditions can persist for a long time, the unease over the timing and size of the anticipated taper coupled with a change at the helm of the Federal Reserve itself might just be the reason (or excuse) for investors to take profits and trim positions.

Still, an extended rise in longer-term interest rates, whether as a result of a strengthening economy or as a result of a reduction in security purchases buy the Fed, could have an adverse impact on home purchases and related product sales.

If a correction in the NDX were to occur, some attention should be paid to some of its key components including: (AMZN); Facebook (FB); Google (GOOG); (PCLN); Seagate Technology (STX); and Western Digital (WDC) which are each trading near their all-time highs. A pullback or two within this group of names might be seen as a hint that a more broad-based decline could be at hand.

In any event, key support for the NASDAQ 100 currently sits at the 3,039 level representing a potential 491-point drop (or a 13.9% pullback) if a sharp correction were to unfold. Over time, however, this trend line will rise and therefore mitigate the potential severity of a setback on the margin.

That being said, the big surprise in this entire scenario would be a solid break above key resistance currently at the 3,530 level occurs which, in turn, would likely catch a number of investors/traders/analysts very much off sides. Nevertheless, the technical set-up does favor the odds for a corrective pullback to unfold over the short-term.


NASDAQ 100 Index Approaches Key Resistance Point

Posted in NASDAQ 100 Index (NDX) on September 8th, 2013 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

The NASDAQ 100 index (NDX), which includes 100 of the largest domestic and international non-financial securities listed on The NASDAQ Stock Market based on market capitalization, has outperformed the S&P 500 Index since June.  That being said, it is now approaching a test of both trend line and “channel top” resistance currently sitting at the 3,185 level with overbought conditions present on weekly and monthly charts. Led by components Facebook (FB), Tesla Motors, Inc. (TSLA),, Inc. (PCLA), Netflix, Inc (NFLX) and others, the NASDAQ 100 has held near its yearly highs in recent weeks despite more noticeable setbacks in the S&P 500 and Dow Jones Industrial indices particularly since the taper-talk began in May.

Nevertheless, overbought conditions on the individual components of NASDAQ 100 suggest that a rise above key resistance at the 3,185 level on the index itself will likely be difficult to achieve. One of the near-term hurdles to deal with is the month of September itself, which has historically been the unkind to equity markets. Add in the unknown consequences of the U.S. getting involved with the Syrian government as it is engaged in a civil war; anxiety over the possibility of a taper; the likely controversy over the impending change at the helm of the Federal Reserve; and a move toward higher long-term interest rates makes for a murky kettle of soup.

Although it is 7.1% below the close of Friday at 3,074, a break below key trend line support currently sitting at 2,870 would have a negative influence on NASDAQ stocks, should it occur. Such a break could also be a signal that suggests a more pronounced move to the downside for equity prices in general could unfold or even accelerate.