The NASDAQ chart is gettng interesting. As you can see, I put a projection off Januray H/L which gave us 61.8% at 2105, Thursday's lows. 38.2% is at 2135, right where we closed Friday. 50% is at 2118 and I would use extreme caution if that level is breached.
If I were to short anything right now it would be the DOW (YM). Historically, the NASDAQ has outperformed the DOW over time in a rising rate environment, especially above the mean (5%) for the Ten year note. Looking at the charts, the Nasdaq seems to hug the 10 day ema a little closer than the DOW and is actually on the verge of curving up. Also note the spread between the 10 day and 20 day moving average. Definitely getting more bearish for the DOW. I am just not sure it is wise to short anything on a short term basis as long as Thursday's lows hold. But if you want to short a rally, short the DOW. If the markets keep falling it is because of rates, and higher rates will hurt DOW stocks more than anything. Remember how they scrambled to add tech stocks to the DOW in the late 90's? Guess what: rates were above 5%. And when rates dropped into the recession of 2001, the NASDAQ lost almost 80%, far more than what the DOW gave up.
This entry was posted
on Monday, June 12, 2006 at 2:34 AM.
