In yesterday’s recap we wrote:
The NASDAQ is back to a key area – that downtrend line than connects highs of the past few months; the last visit here led to an immediate rejection. If you are bearish you can place a short against the index in this general area with a top above the trend line.
This is the benefit of technical analysis – it shows you patterns and probability. Of course it is no guarantee but you had a low risk trade as of yesterday’s closing action as the NASDAQ was hitting an area it has been rejected at. One time it will stop being rejected at a similar area and the trade won’t work but until then you respect the pattern. Today indexes opened badly and sold off throughout the session until a late day rally reduced losses. The S&P 500 fell 0.65% and the NASDAQ 0.70%. A bad data point out of Caterpillar and some bad earnings data out of a bunch of retailers hurt the market.Continue reading