The Nasdaq Composite ($COMPX) ended the session lower by 27.56 points, or 1.12%, on Friday and it closed at 2,483.23. The top gainers in the Nasdaq-100 ($NDX) were CTrip.com Intl. (CTRP) (+6.42%), Yahoo (YHOO) (+5.15%), First Solar (FSLR) (+5.07%), and Marvell Tech. (MRVL) (+5.01%). The weakest were Express Scripts (ESRX) (-1.98%), Illumina Inc. (ILMN) (-1.81%), and Mattel Inc. (MAT) (-1.80%). The Nasdaq Composite ($COMPX) fell 5.3% for the week.
Nasdaq Composite (Figure 3)
Although Friday's action was not the most favorable, it does offer some hope for short-term bulls. The 2B that trapped bears early Friday morning is also a pattern that tends to help stabilize market selloffs. In some cases it can lead to a rapid recovery, whereas in others the typical recourse is a gradual trading channel with a slight upside path that is usually followed by another round of selling once the channel breaks. The second low on the 15 minute charts at the end of the week took place with a momentum move that was stronger than Thursday's selloff. This favors the more gradual corrective scenario as opposed to a rapid recovery, but it can still mean rapid intraday sprints on the upside that can be very favorable to daytraders. It is not, however, typically a strong price development for swingtraders who look to capitalize on multi-day trend moves since a slower and wider trading channel generally means wider stops with less reward potential.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.