NASDAQ 100 Index (NDX) Chart – June 26, 2009

I charted the NASDAQ 100 Index ($NDX.X) on Friday, June 26, 2009 when it closed at $1,480.20 for the week.  While I’m still not able to get on the bull band wagon for most of the indices, the NASDAQ 100 has more appeal still.  NDX pulled back almost 6.5% intraday after hitting a recent high a few weeks ago and has rallied from that level.  A nice round 10% correction would’ve made the story better, but the 6.5% did take some risk off the table nonetheless.  I didn’t bother to draw some of the old trend lines for NDX that have broken support.  Maybe I should have because I think it’s almost a positive to see that it has slowed down its trajectory.  That might mean its rally has legs still since it’s following a less steep slope now.

It found support at the horizontal line I drew.  That line didn’t have a real clear cut history of being a significant level of support, but I wanted to highlight it because it could act as support on the next little pull back for NDX.  The upper trend line of higher highs is far enough away that I think NDX has decent upside potential.  The trend lines that are going to be most interesting to watch are the lines of higher lows.  I drew two of them which both use the May lows as a point of reference.  NDX is trading close to the midpoint of those two lines and the trend line of higher highs, so either direction has potential pull.  The tie-breaker could be made by the moving averages.

NDX is trading above its 10, 20 and 50 day simple moving averages (sma).  The bearish part is that the 20 day sma just overtook the 10 day sma a few days ago.  Interestingly though, within a day of that happening, the 100 day sma overtook the 200 day sma and that’s bullish.  I couldn’t get the latter crossover on the chart, but it took place just above the 1,300 level.  Using the longer term moving averages as a better measure for long term expectations one might surmise that NDX could dip in the near term and longer term (and I don’t mean far in the future) find support and move higher for much longer.

Williams %R is still showing momentum, but can’t be given too much credibility at this point while it hangs out in the neutral area between overbought and oversold.  I want to see if NDX can stay above its 10, 20 and 50 day moving averages in the next couple of days and if so I might make a bullish trade with QQQQ options, hedged most likely.  Then again if it does fall below those moving averages NDX might get the 10% correction I mentioned looking for in the first paragraph and that could entice me to buy in anyway.