The Nasdaq Composite's Chart Shows These Technical Negatives

I recently analyzed the chart of the S&P 500 SPX and found a mixed picture for it, but the chart for the Nasdaq Composite IXIC seems to show that index skating on even thinner ice. Let's dig in.

Here's the IXIC's chart stretching back to July and running through Wednesday:

If you look at things in isolation, the Nasdaq Composite posted a Day One Bearish Reversal of Trend on Dec. 8, followed by a Day One Bearish Confirmation on Dec. 12 (having exhibited the necessary pause between the two). That's a bad technical sign.

Meanwhile, the index's Relative Strength Index (the gray line at the chart's top) has sunk to a less-than-neutral reading.

But even more concerning, the Nasdaq Comp's daily Moving Average Convergence Divergence indicator (or "MACD," marked with black and gold lines and blue bars at the chart's bottom) has experienced a bearish cross-under of its 26-day Exponential Moving Average (or "EMA," denoted by a black line) by its 12-day EMA (the gold line).

This came with the histogram of the 9-day EMA (the blue bars) in sub-zero territory. These are all short- to medium-term bearish signals.

Are there any positives? Yes, a few.

First, trading volume increased on Dec. 12 from the session prior, although not dramatically so. Still, that's a technically positive signal.

Second, the Nasdaq Composite has managed to make contact with its 50-day SMA at 23,123.20, but a level isn't broken technical until something breaks contact with it. Piercings mean nothing.

The bottom line: While there are several indicators that the Nasdaq Composite could be in some trouble technically, the index hasn't surrendered its chart just yet.

It's also key to remember that while December is historically a positive month for U.S. stocks, Dec. 1-15 is traditionally one of the year's worst half-months.

On average, nearly all of the U.S. stock market's December gains going back to 1950 have occurred after Dec. 15.

(Moomoo Technologies Inc. Markets Commentator Stephen "Sarge" Guilfoyle had no position in Nasdaq Composite-based securities at the time of writing this column.)

This article discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. Moomoo and its affiliates make no representation or warranty as to the article's adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.

Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.

TradingView is an independent third party not affiliated with Moomoo Financial Inc., Moomoo Technologies Inc., or its affiliates. Moomoo Financial Inc. and its affiliates do not endorse, represent or warrant the completeness and accuracy of the data and information available on the TradingView platform and are not responsible for any services provided by the third-party platform.