Technical Analysis: Rotation Continues

The Dow (first chart below) continues to hit new highs, while the Nasdaq (second chart) has fallen and it can’t get up. When will this state of affairs change? We have an idea. Look at MACD on the Nasdaq chart – it’s been in a perfect downtrend since September. When the Nasdaq can break that MACD downtrend, it should be ready for a strong advance. For now, it just looks like one big negative divergence. That negative divergence began at the 1890 level; no wonder the index has revisited that level three or four times since then. The Nasdaq has resistance at 1926, 1933-1937 and 1940-1942, and support at 1915, 1910, 1900 and 1878-1887. The Dow has resistance at 10,180 and 10,200-10,300, and support is 10,100, 10,050 and 10,000. The S&P (third chart) has resistance at 1083-1093, and support at 1074-1075, 1071, 1068, 1064, and 1058-1060. Finally, for expiry this week, Max-Pain (the point where most options expire worthless) on the QQQ, the Nasdaq 100 tracking stock, is at about 34.50. Helps explain today’s range of 34.57-35. Too many calls at 35, and too many puts at 34.

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