Monday, June 12, 2006
NASDAQ Technical Picture
The NASDAQ shed 44 points on relatively low volume and closed below 2100. From the NASDAQ chart above we can see that the ADX line is curling up and likely heading towards 40 from 30 which will really add to the bearish momentum. If this happens we could start seeing some panic selling. All tech sectors ended the day in the red with networking stocks leading the fall, chalking up a 4.7% loss on the day. If we can't bounce here, the next level of support is in the 2050-60 area. From the NAMO and NA50 charts above, we can see that we are deeply oversold and that less than 20% of NDX stocks are trading above their 50 day MAs. Today's NDX heatmap is covered in red with only a handful of names closing above breakeven.
Tomorrow's economic data may shed some light - PPI and retail sales, and Wednesday we get the release of the CPI. Friday is options expiration so it will be interesting to see how we end the week. I'm going to guess lower because it appears to be a losing proposition with respect to the economic data. It's very unlikely that the data will not confirm inflation fears and even if they are slightly dovish, BB is taking the market down anyway.
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