Einschätzung von Ed Downs für heute NasComp.

verfasst von Bill, 22.02.2001, 12:20

Dropped To 2,250
Nasdaq is at a critical low. Will it melt down?

From yesterday's commentary,"...If we start down, expect the market to trade to 2,300 and look for a reversal there, then at the next critical support level of 2,250. The most likely scenario is that we will form a trading range from 2,250 to 2,400 over the next few days..."
Well, we hesitated in the vicinity of 2,300 - formed a reaction rally, and then came right back down to within ear shot of the critical 2,250 level, holding just above it at the Close.

I am beginning to get a bead on this market, I think. I have a new trendline drawn through the highs on the 15 Minute Chart. This line intersects the current price line at about 2,325. I think we have a very good chance of a bottom forming tomorrow, and a rally through this line. As always, you should not anticipate based on this. But, if we do rally through the line, we will have a good chance of going through the next line at 2,350 and then forming a higher low. That is what I hope happens.

What if it does not? What if the NASDAQ keeps going down? Well, you can see in the Weekly Chart that we are basically at 2 year lows. While the index certainly can go lower, you have to agree that this market is way, way oversold. The only thing driving stock prices is supply and demand. Everyone is overly cautious right now. We've come down 60% from the high, so folks don't want to be on board for the next 10% down. Understandable. But, once demand for shares comes back into the market, it will rally. This is the reverse situation fo what we had in January. At that point, folks thought the NASDAQ would go to 10,000 (I actually saw someone say that on CNBC). Now, they think it could go to 1,000. Wouldn't make sense. If people don't put their money in stocks (or mutual funds), and interest rates are low, where else do they put their money?

What we want to do is watch for signs of a bottom - and I think this is a real good place. We will be watching 2,325 for an early indication, and 2,350 for the next. Then, we want to see a retracement, and a higher low form. If we DO start down, we have to short. The market could lose another 500 points here. It just depends on how much the"absence of buying" or lack of demand, continues in this market.

Short Term NASDAQ

Short term, we will watch the low at 2,250 and short if it is crossed. To the upside, it's 2,275 for the earliest sign (a trendline break on the 5 minute chart), then 2,325 and finally 2,350. At 2,350 we have a great case for a rally and higher low forming in the medium term.

Medium Term NASDAQ

Medium term, we are watching 2,350 but will not recommend going Long until a higher low forms. That means"out" for the next few days unless you can watch the market during the day. If so, I would consider Longs at 2,350 but be ready to exit if the NASDAQ crosses back through this level.

Summary:

We are there. 2,250. Now, we will see how much pressure there really is, or as I indicated above, the lack of buying. The good thing about this market is the clarity of trend along the 15 and 60 Minute Charts. If we break those lines, we have a great chance of starting a recovery rally. Such a rally would feed on itself, demand will come back in the market, and folks will start picking up stocks that were $150 - selling today for the bargain price of $5. In a year or so we will all likely look back on this as a great opportunity - but don't jump the gun. Wait for the clear sign that a bottom has likely formed.

Thanks for listening, and good luck in your trading!

Ed Downs



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gesamter Thread:

• Einschätzung von Ed Downs für heute NasComp. - Bill, 22.02.2001, 12:20
  • Nasdaq und die Auswirkungen / Zwei mögliche Szenarien mT - Sascha, 22.02.2001, 12:36
    • Alle hoffen auf 1 (incl. mir), also ist 2 wahrscheinlicher! owT - buckfish, 22.02.2001, 14:35