Tech stocks have been the embodiment of momentum in 2013, posting nearly 30% gains YTD. But as we witness yet another push higher, it’s likely time for some caution: Â A short-term trading top is likely this week.
I say this for a few reasons:
1) Â The charts are overbought (don’t be so obvious!)
2) Â DeMark daily and weekly sell setups are aligning
3) Â The US Dollar is nearing support and may be setting up for a bounce
4) Â The S&P 500 appears to be “following the script.” Â It is on bar 9 of a daily sell setup today and within the 1645-1660 target I recently pointed to.
I refer to this as a trading top, because the price action after a high (short or intermediate term) are really what matters. Â That said, let’t turn to the charts. Â Note that I am using the Nasdaq 100.
On the daily chart, the pattern may be setting up for a pendulum reversal back through the apex. This pattern possibility is set up by the recent breakout above rising resistance and would be confirmed by a break back through it (to the downside). Note this has not happened as of yet, but is something to keep on your radar. The daily sell setup is on bar 8 of 9. This could produce a short term reaction lower over the next week. Â And this reaction could receive some extra oomph from the weekly sell setup that is set to record next week (also on bar 8 of 9). All in all, this could apply pressure on tech stocks over the next 2 to 3 weeks. Â 3225-3250 is first support area, followed by 3050-3075.
As always, trade safe, trade disciplined.
Nasdaq 100 Daily Chart
Nasdaq 100 Weekly Chart
Twitter:Â Â @andrewnyquist
No position in any of the mentioned securities at the time of publication. Â Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
