With NASDAQ just missing out on a seventh consecutive up week and testing the important 3200 level last week, it seems like a good time to step back and take a look at where we are from the bigger picture point of view. By this, I mean the weekly chart.
The importance of the 3200 level can be seen from the above chart as it is the level of previous highs. What struck me most when I saw the above chart, was the negative MACD divergence i.e. MACD is making lower highs while the index is making newer highs. On further inspection, it was discovered that a negative divergence has also been developing in the NASDAQ McClellan Oscillator over the last few months.
Does this mean you should go ahead and short the index? Well, not exactly. The divergence has been developing for a long time now but the market has been grinding upwards. Go with the flow but keep tight stops in place as a pullback to MA(20) cannot be ruled out.
You can follow me on twitter for latest blog updates. Also, here is the link for free subscription to the blog.
Take care and good luck!
No comments:
Post a Comment