On Monday, I outlined expectations for a Nasdaq 100 (NDX) 1950 to 2000 range with the possibility of distribution pressure from 2000 resistance offering short-exposure for the 1950 target. While this expectation was met, I didn't expect it to happen all in one day. The Wednesday session was quite amazing, in that the spike to the 2000 level created a one-day 50-point drop back to the 1950 target. The volatility this week definitely returned and created more angst for trend traders, while range traders were back on their game.
There is an absence of any major economic or earnings news this morning, so I will be looking for technical trading to continue ruling the landscape for the Friday trading session. Oil prices have obviously taken center stage this week, and this focus will most likely continue to take the interest of the traders off of the rest of the sectors, including technology. For this reason, I don't expect the Friday session to be as volatile as the last four sessions this week.
I suspect that most of the core long exposure that was built up beginning the week of the Bear Stearns buyout has been slowly taking profits along the way, and these volatile pullbacks are not making investors jump out just yet. It is the late-to-the-party entries that are creating this volatility as they try to get in on the very last part of the rally, and the no one wants to be left standing when the music stops.
It was these people who I wanted to take an advantage of, as I was hoping to see a move to 1910 this week to shake them out. I would still like to see 1910 today, but if it doesn't happen, next week will be just as good to create some new long exposure for moves back to the 1950-2000 range. I am not looking for a break of NDX 2000 next week, but rather expecting more volatility in the 1910-1950 range.
For today, I'll be using early weakness in the futures markets to press the NDX back to 1950 and mark the half-hour support of this early action. If the half-hour support can break, I'll be looking for NDX 1910 as a final target for any new short exposure. Should the half-hour resistance level break, then I have no setups, as I am not looking to create setups in a volatile range and the price behavior between 1965 and 2000 doesn't have any solid technical levels to base setups on with any high degree of probability.
Technical Analysis Big-Cap Tech Sorely Needs New Leaders 5/8/2008 11:45 AM EDT The group's runup could sputter unless some new names step up. Here are some possibilities.
At the time of publication, Schumacher had no positions in the stocks mentioned, although holdings can change at any time.
Chris Schumacher is a financial trader, speaker, writer and co-author of Techniques of Tape Reading. While Schumacher cannot offer specific investment or trading advice, he appreciates your feedback; click here to send him an email.
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