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The technical picture for the Nasdaq

David Becker
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The Nasdaq was one of the market leaders on the way up which makes it a strong candidate for a leader on the way down. Price action over the past two trading session has been negative, and there is a chance that stocks will correct 5-10% but this is not likely until the beginning of May of 2014.

The Nasdaq has sliced through support near the 20-day moving average at 4283, and is poised to test the 50-day moving average near 4199. Resistance on the tech heavy index is seen near the recent highs at 4370.

Momentum on the Nasdaq is negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal, and the trajectory of the MACD is negative.

The relative strength index, which is an oscillator that measures momentum as well as, overbought and oversold levels, moved lower with price action reflecting accelerating negative momentum while printing near 53, which is in the middle of the neutral range.

The Nasdaq advanced decline volume shows negative volume on Tuesday, but not nearly the same amount of downward volume on Wednesday, which means that maybe support will hold and prices will again gain traction during the latter part of this week.

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