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 Tuesday 08 March 2016

PM Bulletin: Nasdaq 100

 

 

Here’s a daily chart of the Nasdaq 100:

  
I usually only keep half an eye on the Nasdaq 100. If I want to check the temperature of the US equity market I go straight to the S&P500 – it’s a bigger index and so more representative of the overall market. Anyway, usually the three major US indices tell us the same thing – if the S&P and Dow are both up, then the Nasdaq 100 will be as well. Of course, that’s not always the case. It will be on days when the moves are significant, but there have been a number of occasions recently when there’s been divergence between the indices. This is neither here nor there if you’re a trend follower, but it can be irritating if you’re day-trading.
  
Here’s the S&P500:





The low-high-low of the respective Andrews’ Pitchfork points occurred on the same days: 20th Jan, 1st and 11th February. The Fibonacci Retracements only differ by a day on their starting points. So we can see how closely the two indices match each other. But what I find interesting is that the rally from 11th February appears less vigorous for the tech-heavy Nasdaq 100 than the S&P, save the sharp bounce on 1st March. It took the Nasdaq 100 longer to retrace 50% of the Jan-Feb sell-off and it has struggled ever since. In contrast the S&P has tacked along the median line of the Andrews’ Pitchfork in a textbook fashion. In both cases volatility as measured by the Average True Range has been declining.

I’ll be keeping a close watch on both from now on as we trade through the central bank meetings for any sign that one index may lead the other.

 
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Posted by David Morrison

Tagged: Bulletin PM

Category: PM Bulletin


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