NASDAQ 100 Macro Chart Observations

November 26th, 2012

by Dominic Cimino

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I want to share with you my macro observations of the NASDAQ 100 chart. I believe the NASDAQ 100 to be a leader among markets, often leading the way for U.S. equity trends.

In the chart below, notice how the market is trending higher in the same type of channel formation that I mentioned in previous articles. The channel is represented by the parallel red lines. Notice also how the market recently tested major channel support, and how that support held on the market's first assault. This is a major support line to watch, even if you don't trade or invest in the NASDAQ 100. A breaching of this support line could suggest some real general market anguish. The upward trend has been intact for four years.

The horizontal blue line represents the Fibonacci 50% retracement of the 2000-2002 market break and shows how this resistance held the market's first and second attempts at a greater rebound rally. This level, at 2820, remains a formidable resistance area in the NASDAQ 100 market. On the other hand, the major support mentioned above is found at the 2500 area via the trend channel support line. A break-out either way could be a harbinger for future general market direction.

Finally, the horizontal green line represents the neck-line of an inverted head-and-shoulders bottom formation. The pattern did indeed portend a significant rally, even as market fundamentals seemed imperiled at the time.

Dominic Cimino

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Preferred planning concepts, LLC & Cambridge are not affiliated.


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