After the Nasdaq 100 gapped down at the open Wednesday, the bulls limped their way back above 1670. After the strong failure Tuesday, I was actually pleased to see a little slow basing action to digest some of the move rather than more erratic, unsustainable behavior. If the bulls can hold the 1670 level Thursday again on a base and slowly crawl back to the 1690 level, I would consider the second half of the week a victory for the bulls.
My intraday and near-term biases remain the same. The congestive range between 1670 and 1705 continues to frustrate trend traders. I feel like Bill Murray waking up to "I Got You, Babe" every day. I want to drive the groundhog off the friggin' cliff. I'd like to see some resolution to this base that can confirm or invalidate my bias for retests of 1720 and 1765. On the invalidation side, a close under 1630 should create a strong thrust back to the 1600-10 gap fill level.
Until confirmation or invalidation, the song remains the same. What the bears gain one day, the bulls steal back in the next two to three. Then as the bulls get happy, the bears unload distribution pressure and the bulls run for the hills instead of bidding into it to hold the index at higher levels. This has gone on too often to put an intraday bias together with any real consistency. I've given up on intraday movements other than to use intraday ranges as guides for future base resolutions. I'm content to run a profitable strategy off of a break higher or eat the strategic loss should the index close under 1630 and move outside my risk parameters again.
My bias gels with what some of the top economists and market analysts write. I simply need the rest of the world to get on board to push the index above former resistance levels. I want to slowly see more money get on the train to upsville and create a higher base.
P.S. Will you be there when Cramer makes his next move?
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Technical Analysis Rock-a-Bye, NDX Bears 3/20/2006 9:18 AM EST If they can invalidate head-and-shoulders formations on two charts, the bulls can put the bears to sleep this week.
Technical Analysis Cabin Fever on the Nasdaq 100 3/21/2006 9:15 AM EST Frustration mounts as traders remain stuck in a narrow congestion range.
Chris Schumacher is a financial trader, speaker, writer and co-author of Techniques of Tape Reading. He has delivered seminars throughout the U.S. and is a featured speaker at trading expos. At the time of publication, Schumacher had no position in any securities mentioned in this column, although holdings can change at any time. He is a graduate of Ohio State University and has served as a guest lecturer at Ohio State's Fisher College of Business as well as the Center for Entrepreneurship. While Schumacher cannot offer specific investment or trading advice, he appreciates your feedback; click here to send him an email.
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