The bulls are calling it a breather, the bears are wondering if we are backing off from a major top. The SOX closed below the all important 61.8% fib from 2004 (480.55). This is not what bulls had in mind, especially after double topping at August highs. On a relative basis, the SOX is way behind NDX/QQQQ, and that is never a good sign. QQQQ still has a nice gap to close below at 40.77 (11/17). Weekly S2 is 40.94, around gap open and there is a solid chance we could correct to that zone. NQ has the same gap at 1661.50. Weekly S2 is 1665.50, close enough. Today we found tepid support at weekly S1 and trendline on the hourly chart and we might have more downside given the parabolic rise of the past few weeks. Keep an eye on the COMP as we approach 2200. The area of resistance I discussed Saturday (2265) has proven too much for bulls. Note also the big rise in the VIX as it jumped today above the 10 day ema. Bulls need to be very careful here and booking profits on any bounce at this point would be wise. Selling too soon is better than selling too late.
This entry was posted
on Monday, November 28, 2005 at 10:12 PM.
