NASDAQ Composite (.IXIC) Reverses Lower On ISM Data
The Nasdaq composite forfeited a solid early gain of as much as 0.8% amid a broad initial advance in stocks today. But another month of weak manufacturing data torpedoed the rally. The tech-weighted index slipped around 0.7%.
Near the noon hour in New York, the S&P 500 fell 0.9% after rising 0.5% in the first half-hour of trade. The Dow Jones Industrial Average sank 1%, hit by at least 10 of its 30 components.
Volume ran sharply higher vs. the same time on both main exchanges. Monday’s turnover was unusually quiet amid the Rosh Hashanah Jewish new year holiday.
Traders crowded back into long-dated U.S. government bonds. The benchmark Treasury 10-year note’s yield plunged 6 basis points to 1.62%.
Manufacturing Recession For Real?
The U.S. contraction in manufacturing activity extended a second month in September. An Institute for Supply Management survey index for September dropped to 47.8, well below the break-even forecast of 50 from Econoday. This month, the U.S. is expected to increase tariffs on billions of dollars’ worth of Chinese imports, including many consumer goods.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 8,004.69.
The projected upper bound is: 8,197.46.
The projected lower bound is: 7,608.09.
The projected closing price is: 7,902.78.
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 23 white candles and 27 black candles for a net of 4 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NASDAQ COMPOSITE), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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 23.8357. This is not an overbought or oversold reading. The last signal was a buy 4 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 41.77. 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 83 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 -115.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 12 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 5 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -90.653 at 7,908.685. Volume was 4% below average (neutral) and Bollinger Bands were 37% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 8,053.97 8,031.74 7,703.94
Volatility: 15 24 23
Volume: 622,093,056 557,915,968 574,125,632
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 2.7% above its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on .IXIC and have had this outlook for the last 17 periods.
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