Keep a close watch on NQ (NDX e-mini futures). We are sitting right at the 10 DMA (1643), in fact we closed below and it was resistance in the last hour of trading on Friday. NQ is back in the wedge and it will have to clear 1647 to get out of it again and out of trouble. Since it also is the weekly pivot, you can bet there will be some volume at that level.
Of course, I don't need to remind you to keep an eye on the semis. SMH broke down below the 20 dma and flunked the trendline support test, which is not surprising since it was part of a bearish ascending wedge I have repeatedly warned about. Immediate resistance is confluence July high and 38.2% at 33.45. Above that, bulls desperately need to reclaim the 20 DMA at 33.83. The downside potential is a quick drop to the 50 dma at 32.31 which could very well be an attractive long entry. But be patient and let it come to you. The last few days of the quarter could see some portfolio shuffling as funds do the ritual window dressing dance, all designed to make you believe your money was in the right place. Since they all chased techs, I expect then to try and hold them up. But they might be thwarted by some earnings warnings. It's going to be interesting and fun for traders who can play support/resistance without getting married either way.
The only fundamental play I like is gold. The dollar is under increasing pressure and buyers from India have started hitting the market as the see that time is running out for ECB to do more selling. They need gold for the season and if they think we saw the lows, there could be a stampede. Support is crystal clear at 590 for the December contract. A drop to 580 would be bearish and could signal new lows. But for now, bullish momentum is back. Let's see how long it lasts.
This entry was posted
on Sunday, September 24, 2006 at 10:28 AM.
