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Have we put in a bottom? The chart of NDX looks bullish ever since that key reversal seven trading days ago. Note the close above 1957.60, 50 dma and the strong bounce off the 20 dma at 1928.55. Nevertheless, we are bumping up against stiff resistance, namely the June 2001 highs of 1963.83 and 61.8% retrace of the current correction at 1964.72. Volume has been uninspiring. We need to see what happens at 1965. Failure will set up a retrace to 1910, midway rally gap fill ( as oppose to a runaway gap from a bottom) and 38.2%. V bottoms snaps are powerful, hence the big rally of the past week, but don't count your chips yet, we haven't even taken out the August highs. I still prefer trading this day to day.The July new home sales number was most likely a last hurrah before the credit crunch and tightening lending standards. It will be interesting to see if existing home sales on Monday corroborate Friday's data.
COT shows that commercials were long ES, NQ and ER the past week and non-commercials were mostly short, hence the squeeze. This is still a heads up for shorts. We will see if next week's data changes, but so far the big guys have not panicked and stayed net long.
This entry was posted
on Saturday, August 25, 2007 at 8/25/2007 11:23:00 AM.
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