Nasdaq - lame duck ?

CME:ND1!   None
I have noticed people are getting ready to pop their champagne when the DOW will hit all-time-highs soon, just shy away a few points (while forming a possible BROADENING TOP)...

But studying the Nasdaq it appears to be forming a different pattern, a potential Head & Shoulder and this could be the right shoulder. I am aware H&S are very often pre-assumed and didn't come about, I had my fair share of that... but that doesn't mean not watching out for new possible candidates.

Obviously Apple is a leading weakening component of the Nasdaq, but nevertheless, this could be a major top and I am ready for a 38%-50% big retracement.

It appears the nice rally since 2009 unfolded in 5 waves ( I am not a great Elliot Waver though). The recent tops (so far) building strong resistance and if this current top hold, it certainly will create a H&S . (And by the way, even if the Nsdaq rallies pass the old high towards 2900/3000 it will produce a bearish rising wedge with negative divergence, but first things first). The trendline since 2009 is quite strong and has been tested several times and we also have rising moving averages. But we have a similar H&S formation on the RSI and a massive negative Divergence on the MACD .

If MACD gets triggered it is the start of a bigger correction.
By that time the trendline will be broken and I don't expect then that the 100d MA will be very strong.

This is a weekly chart, hence it will be a medium term play, so I am looking now on the daily chart for first constructive signs to confirm a reversal. Perhaps with a small unit as a start, I am debating if my stop should be just above the old high or should I add there and working a larger S/L because the risk/reward is quite interesting considering a quite large drop. I will certainly add more units on breaking the neckline and later breaking 100d MA.

happy trading

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.