{"id":4090,"date":"2014-08-06T08:10:49","date_gmt":"2014-08-06T12:10:49","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4090"},"modified":"2022-04-06T15:05:47","modified_gmt":"2022-04-06T19:05:47","slug":"where-is-nasdaq-support","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/where-is-nasdaq-support\/","title":{"rendered":"Watch This Key NASDAQ Support Level To Determine Market&#8217;s Next Move"},"content":{"rendered":"<p>In my <a title=\"Where Are Stocks Headed After Recent Market Volatility?\" href=\"https:\/\/www.morpheustrading.com\/blog\/stock-market-volatility\/\" target=\"_blank\" rel=\"noopener\">previous blog post<\/a>, I said that indecision and choppy price action near the highs &#8220;is often a warning sign that a substantial pullback\u00a0<em>may\u00a0be<\/em>\u00a0just around the c<img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-4092\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2014\/08\/fibonacci.jpg\" alt=\"Fibonacci\" width=\"267\" height=\"189\" title=\"\">orner (especially when combined with higher volume selling in the broad market).&#8221;<\/p>\n<p>Fast forwarding two weeks later, stocks have indeed slid lower, weighed down by continued distribution (higher volume selling) in the broad market.<\/p>\n<p>Of all the main stock market indexes, only the NASDAQ\u00a0100 remains above key intermediate-term support of its 50-day moving average.<\/p>\n<p>As such, <strong><a title=\"Overview of our market timing model\" href=\"https:\/\/www.morpheustrading.com\/blog\/market-timing\" target=\"_blank\" rel=\"noopener\">our market timing model<\/a> now shifts into &#8220;neutral&#8221; mode<\/strong>, and could potentially flash a new &#8220;sell&#8221; signal within the next week or two if the NASDAQ Composite <em>clearly\u00a0<\/em>breaks down below its\u00a050-day MA and is unable to quickly recover.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/where-is-nasdaq-support\/#Follow_The_Fibonacci\" >Follow The Fibonacci<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/where-is-nasdaq-support\/#Watch_Leading_Stocks_For_Clues\" >Watch Leading Stocks For Clues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/where-is-nasdaq-support\/#Laying_Low_But_Prepared\" >Laying Low, But Prepared<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Follow_The_Fibonacci\"><\/span>Follow The Fibonacci<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One reliable technical indicator I use to help determine significant support and resistance levels is called <em>Fibonacci<\/em> (<a title=\"How to use Fibonacci for swing trading\" href=\"https:\/\/www.morpheustrading.com\/blog\/fibonacci-for-swing-trading\/\" target=\"_blank\" rel=\"noopener\">click here<\/a> for an overview of how it works).<\/p>\n<p>With Fibonacci, a mere <strong>38.2% retracement off the highs of a prior wave up is considered\u00a0bullish<\/strong> and normally suggests further upside.<\/p>\n<p>With the NASDAQ Composite, the best scenario would be for the index to consolidate (for a few weeks) above its 38.2% Fibonacci retracement level of the last wave up.<\/p>\n<p>This means the 4,280 area is a key level of support to pay attention to in the coming weeks:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/140806COMP2.png\" alt=\"$Nasdaq Composite at support\" title=\"\"><\/p>\n<p>Although not shown on the weekly chart above, the daily chart of the NASDAQ shows the index in danger of breaking near-term support of its 3-day low.<\/p>\n<p>If it does, bearish momentum could quickly spark a sell-off down to the 50% Fibonacci retracement level (just above 4,200), which roughly converges with support of the 40-week\/200-day moving average.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Watch_Leading_Stocks_For_Clues\"><\/span>Watch Leading Stocks For Clues<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One of the key factors that determines the status of our market timing system is the <strong>performance of leading growth stocks, which usually lead the broad market<\/strong> in either direction.<\/p>\n<p>During the most recent stock\u00a0market rally, quality growth stocks such as Tesla Motors ($TSLA), Under Armour ($UA), and Facebook ($FB) underperformed while the major indices rallied higher.<\/p>\n<p>However, those same stocks that previously showed relative weakness are now exhibiting relative strength because they have held up well over the\u00a0past few days.<\/p>\n<p>Cavium Networks ($CAVM), Palo Alto Networks ($PANW), Ambarella ($AMBA), and Restoration Hardware ($RH) are few other growth stocks to monitor because a mass breakdown in these stocks could pave the way for\u00a0a deeper market correction.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Laying_Low_But_Prepared\"><\/span>Laying Low, But Prepared<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>With the stock market still under\u00a0distribution and our timing model now in &#8220;neutral&#8221; mode, I\u00a0see <strong>no reason to establish new long positions right now.<\/strong><\/p>\n<p>The only exception would be if select, low-risk pullback opportunities developed in top growth stocks over the next few days.<\/p>\n<p>Unless you have a big profit cushion in a position and can hold through a 20% to 30% price correction without feeling too much pressure, it may be wise\u00a0to raise the stop prices on any open positions you are holding (then wait for lower risk re-entry points to emerge).<\/p>\n<p>As always, I will alert\u00a0<em>Wagner Daily<\/em> subscribers with my exact entry, stop, and target prices of any new stock or ETF trade setups that meet my strict entry criteria in the coming days.<\/p>\n<p><em>If you are not yet a subscriber to my nightly swing trading newsletter, <a title=\"The Wagner Daily\" href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><strong>sign up now<\/strong><\/a> to start your 30-day trial subscription today.<\/em><\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});\n\/\/ ]]><\/script><\/center><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In my previous blog post, I said that indecision and choppy price action near the highs &#8220;is often a warning sign that a substantial pullback\u00a0may\u00a0be\u00a0just around the corner (especially when combined with higher volume selling in the broad market).&#8221; Fast forwarding two weeks later, stocks have indeed slid lower, weighed down by continued distribution (higher [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-4090","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4090","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=4090"}],"version-history":[{"count":1,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4090\/revisions"}],"predecessor-version":[{"id":11540,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4090\/revisions\/11540"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4090"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4090"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4090"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}