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NASDAQ 100 Index has long term moving average crossover

March 13, 2016

There has been a decent rally from the bullish breadth divergence that I identified in mid February. Now, major indices have rallied back into long term moving averages that have turned downwards.

A specific set up I look for is a long term moving average crossover, as explained in the My methods section.

NASDAQ 100 Index

NASDAQ 100 WEEKLY 130316

  • The 30 and 40 week moving averages last crossed over in August 2009
  • Divergence on the MACD indicator has been building since early 2014 and this was more pronounced when the final high was made in early December 2015
  • The moving averages first crossed in the last week of February, remember that the cross is not an exact timing tool
  • Now that price has rallied into falling moving averages, that makes price more vulnerable to continuing the topping process

Trading tactics

Enter a short position in the NASDAQ 100 Index on the next weekly reversal, with a stop loss above the most recent high. A weekly reversal this coming week will be below 4,232.08 or on the NASDAQ 100 Trust ETF (QQQ), below Thursday’s low of $103.31.

I will record this trade in the P&L for this site when it eventually is triggered.

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