NASDAQ Composite (.IXIC) Expected to produce a ‘death cross’
Netflix Inc. stock has fallen far enough and long enough to produce its first “death cross” pattern in nearly three years, and become the third member of the former FAANG technology darlings to suffer that bearish technical fate.
A death cross refers to when a price chart’s 50-day moving average, viewed by many as a short-term trend tracker, crosses below the 200-day moving average, which many recognize as a dividing line between longer-term uptrends and downtrends. Technicians view the bearish cross as marking the spot a short-term pullback graduates to a long-term downtrend.
The Nasdaq Composite Index COMP, -3.03% which counts all the FAANG stocks as components, will likely produce its first death cross since January 2016 some time during the week after Thanksgiving. The index still has a way to go before entering a bear market, however, as it closed Monday about 13.3% below its Aug. 29 record close of 8,109.69.
The Nasdaq’s 50-DMA has declined to 7,600.957 on Monday from $7618.871 on Friday, while the 200-DMA has climbed to 7,515.501 from 7,515.196. Based on the average daily rates of change for the moving averages this month, a death cross could appear in seven more trading sessions, or on Nov. 29.
The S&P 500 index SPX, -1.66% and the Dow Jones Industrial Average DJIA, -1.56% are still weeks away from a death cross.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 7,360.23.
The projected lower bound is: 6,660.89.
The projected closing price is: 7,010.56.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 37.6100. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 37.13. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 17 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -150.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -219.396 at 7,028.477. Volume was 12% above average (neutral) and Bollinger Bands were 18% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 7,295.80 7,600.96 7,515.50
Volatility: 33 30 23
Volume: 620,181,888 630,115,136 545,609,216
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE is currently 6.5% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 32 periods.
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