Is The NASDAQ In An Uptrend Or A Down Trend?
over the last 5 bars, we see that the NASDAQ has moved up on
4 days. This means that it is trending up, right? Well, yes
if we are considering 5 bars. But what if we are considering the
month of March? In that case, the trend is down even though recent
prices have moved up.
So, should we trade long or short here?
Here are some clues. According to the TTC-A template, yesterday
the NASDAQ triggered short. It did this because:
- The 30-day
moving average of price is down.
%R moved above -20 into extreme over-bought territory.
Should the NASDAQ now fall below its 7-day moving average, a short
entry would be confirmed.
But there is
another side of this coin. Could we not look at the current chart
and say, “It looks like the NASDAQ may be changing
overall direction from down to up.” Sure, that would be a
valid observation. This could certainly be an overall change in
trend in the making. So let’s now ask, “When would
we be convinced that the NASDAQ is now in a sustainable uptrend?” Here
are some points to consider:
the NASDAQ is right at resistance in two ways. First, it
hit the round 2,000 number on March 31st and could not surpass
Second, the NASDAQ is also at a descending line of resistance
as shown by the price peaks in January, February and earlier
- If the
NASDAQ broke up through resistance, we would turn away from
opening new short positions.
- If the
30-day moving average turns up we would be more bullish and
less inclined to look for short trades.
- If prices
stay above the 30-day moving average, we would also be persuaded
to be looking for trades that take advantage
the “Counting Method”. If, in the next two
days, we see a close in the NASDAQ that is 1% or higher
of its total on clearly higher volume, expect prices to move
What then is the moral
of this story?
not necessary to predict the future. Wait for the market to reveal
itself, and then put yourself in
Why not wait
a day or two or three to see which way this market will go? If
it reveals itself to be inclined to go up, we’ll
trade that way. If it shows a price breakdown and closes below
a 7-day moving average, we’ll trade that way. Become a
reed in the wind, Grasshopper, willing to bend with its pull.
By the time
you read this article the NASDAQ will have likely shown us its
intent. Chart today’s chart and
see for yourself.
As a trader,
teacher, author and lecturer Dr. Stephen Cooper has guided thousands
of students to greater success in trading stocks and options.
His site, www.OnlineOption.com. is an excellent resource for
traders of all levels. A free newsletter is available by going
to OnlineOption.com. Over the past five years Dr. Cooper has
conducted live teleconference courses covering personal financial
basics, stock screening, technical analysis and practical trading.
He has authored The Online Option Trader, Windows to Wealth,
and The Truth About Money. With over 18 years of experience Dr.
Cooper is recognized for his successful techniques, his clear
and systematic teaching style, and technical expertise.