Here is the NDX (Nasdaq 100) chart I was referring to. As you can see, perfect stall at 61.8% projection October. I had outlined the possibility of NQ (NDX futures) moving up to 1830, and it could happen in the thin Friday trading, but this chart could tell us the cash index is at pretty strong resistance. There is another interesting aspect to this, one that I alluded to several times and is now even more urgent. Note that during this entire rally, we have not spent more than 5 or 6 days away from the 10 day moving average (exponential on this chart, blue line). We have now been trading a whopping 10 days away from it. That is what I call overextended. Of course, all this time the average has been rising, but now there is the added risk of trading through it since the rise above was parabolic, which tends to correct harder as buyer fatigue sets in. 
Longer term bulls would have preferred a more tradeable rise so as to keep a wall of worry present. It's all very artificial, of course, as the Feds inject liquidity to prop up the financial markets to make up for the housing loss. But the dollar is falling apart and that will scare away foreign assets. You can see the selling every day at the open, It's almost brutal. Then, all of a sudden, the phantom buyers appear (do you really think funds are still buying the same stocks here?) forcing shorts to cover and more retail money to jump in for fear of missing the boat. It just makes it very hard even for seasoned traders to commit without care on the long side and holding until the close after such a run. I preferred shorting the opening bounce, covering and getting out. It was quick money, simple (R2 at open is almost always a reversal) and very profitable (NQ dropped almost 20 points at the open in less than 30 mns and then took all day to get to new highs, far too tedious). You just can't hold on to it. That time will come.
The easier decision is to short the dollar on rallies (long EUR/USD) as it seems the trend is now set into year-end barring a monster bullish piece of economic data. For those who don't like currencies, buying gold on dips is the alternative.
Longer term bulls would have preferred a more tradeable rise so as to keep a wall of worry present. It's all very artificial, of course, as the Feds inject liquidity to prop up the financial markets to make up for the housing loss. But the dollar is falling apart and that will scare away foreign assets. You can see the selling every day at the open, It's almost brutal. Then, all of a sudden, the phantom buyers appear (do you really think funds are still buying the same stocks here?) forcing shorts to cover and more retail money to jump in for fear of missing the boat. It just makes it very hard even for seasoned traders to commit without care on the long side and holding until the close after such a run. I preferred shorting the opening bounce, covering and getting out. It was quick money, simple (R2 at open is almost always a reversal) and very profitable (NQ dropped almost 20 points at the open in less than 30 mns and then took all day to get to new highs, far too tedious). You just can't hold on to it. That time will come.
The easier decision is to short the dollar on rallies (long EUR/USD) as it seems the trend is now set into year-end barring a monster bullish piece of economic data. For those who don't like currencies, buying gold on dips is the alternative.
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on Thursday, November 23, 2006 at 11/23/2006 10:08:00 AM.
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