Happy Halloween fellow Trendy Stock Charts members! Halloween is one of my favorite holidays of the year. And there is no better time than with the scary backdrop to analyze the recent chart activity for the NASDAQ Composite (COMP).
Halloween 2016 does seem to be scarier in the market when compared to the last couple of them. The NASDAQ is near its all-time highs except for the last few days of weakness.
I have been anticipating a push below the 5,000 level for the NASDAQ to confirm an Ending Diagonal wave pattern.
Let's see how the recent chart activity looks for the index and see what we can expect over the next couple of weeks leading up to the election results.
NASDAQ Composite (COMP)
This first chart is a 1 year daily candlestick chart for the NASDAQ Composite (COMP). It has a Fibonacci Extension Tool overlaid on the first uptrend and pullback in the NASDAQ's new trend. Notice the resistance around the 100% Target Line and recent weakness?
The Ending Diagonal wave pattern that I have written about previously suggests that the NASDAQ breaks down below 4,975. Let's see if this short-term weakness spreads leading up to the presidential election. Sure seems like it could.
COMP - Bearish Reversal Candlesticks
Looking at a weekly chart for the NASDAQ Composite and one should be on red alert. There have been several bearish candlestick patterns the last several weeks as seen on this 2 year weekly candlestick chart.
That cluster of bearish reversal candlestick patterns seem to indicate a strong reversal building up in this area. A push down to break below the 5,000 level seems probable. The main question is "Does the 5,000 level hold support?". If the 5,000 level does not hold, there is a better chance we will see the 4,200 - 4,500 level before the index sees another all-time high.
NASDAQ Composite (COMP) - Summary
With a MACD Histogram that is just starting to pick up momentum on both the daily and weekly charts, anticipate some additional short-term weakness for the NASDAQ Composite (COMP).
Things always get a little scarier when the market feels the pinch...so watch out for those market ghosts and goblins this Halloween and instead play a trick on them...move into some cash and be ready to buy at a lower support area on your favorite stock when it gets to its support level.
Does this mean an opportunity for gold over the next few weeks? It could mean that after re-testing its gap-up area it could bounce as the NASDAQ Composite (COMP) feels the pinch. Something to watch.