Nasdaq at major resistance
Posted By Mike On Dec 22, 2009 @ 7:28 pm In charts, technicals | 1 Comment
Look at how important this level is for the Nasdaq 100 . It has been both resistance and support and seen breakaways and breakdowns. It also happens to be the 61.8% Fibonnacci retracement of the ‘07-’09 decline.
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Source: Prophet.net
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Levels like this are not voodoo. When there has been a lot of activity at a certain price, there is much emotional weight attached to it. In this case, those who went long the Nasdaq and its components at this price must be delighted to be breaking even here. Those who decide to count their blessings and sell provide supply, as do the other longs and short sellers who recognise the importance of the level. If there is more eagerness from buyers than sellers here, that supply will be absorbed and prices can move higher, as people get more confident that the bear market levels are behind us. Of course you could say that for any level, but levels that have previously lead to multiple reversals or accelerations have extra importance.
A breakthrough here will mean a lot more if the S&P500 and Dow follow suit. As noted before, in ‘07 and ‘08 the NDX had a habit of coasting higher just as things deteriorated. The Dow and SPX of course are still under their highs so far.
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