Nasdaq Running The Gauntlet

Normally, I do not show the same chart two days in a
row in “Chart of the Day.” There’s usually more to be gained education-wise by
showcasing a variety of technical situations across different stocks and
indices.

But today’s action in the Nasdaq
(
$COMPX |
Quote |
Chart |
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PowerRating)
shows an rare alignment of
multiple patterns that I simply must bring to your attention.

As you may recall in my previous columns, I often look for
multiple-pattern setups of this type in individual stocks. They produce tradable
pullbacks a high enough percentage of the time that I would be taking this
current confluence in the Nasdaq pretty seriously.

In the chart above, we have the Nasdaq hitting potential resistance at the top of a three-month trend channel, its 50%
retracement (Nov. high and Nov. low) and its old broken support from early-Nov.
This is not far from the underside of the Nasdaq’s 50% moving average.

Notice how the Nasdaq has been rising into the continual stream
of uncertainty about the election ruling. Because the outcome has been widely
expected to be in Bush’s favor, you could reason that the positive outcome is
already factored into the market.

Based on my experience, I will be looking for confirmation in
the price action that some kind of pullback will come in here. Could be brief.
Or could be a resumption of the downtrend. As always, we don’t want to predict
anything, but rather wait for the market to announce its verdict.

Until Tuesday,

Eddie