Downward pressure mounting

March 15, 2018 11:05 AM

Nasdaq Remains Above 7,000 Mark

The technology Nasdaq 100 futures contract was stronger than the broad stock market recently, as it broke above 7,000 mark and continued reaching new record highs. The market gained more than 1,000 points off its February 9 bottom, as it remarkably retraced all of its late January - early February sell-off in one month. The Nasdaq futures contract was above 7,200 mark on Monday, before reversing lower and retracing most of its Friday's rally. Since then, it keeps bouncing off support level at 7,000-7,050. The Nasdaq futures contract fluctuates along that support level, as the 15-minute chart shows:

Apple, Amazon - Ugly Charts

Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com) again. It was one of February stock market rout's main drivers. Then it led broad stock market rebound rally. It fell close to support level of $150 on February 9. Since then it was retracing early February losses. The market reached new record high on Tuesday, but then it reversed its intraday uptrend and closed below $180. We can see some negative medium-term technical divergences - the most common divergences are between asset’s price and some indicator based on it (for instance the index and RSI or MACD based on the index).

In this case, the divergence occurs when price forms a higher high and the indicator forms a lower high. It shows us that even though price reaches new highs, the fuel for the uptrend starts running low. On Tuesday, the marked formed a negative candlestick chart pattern called "bearish engulfing". It consists of a smaller white candlestick followed by a black candlestick that "engulfs" the white one. This downward reversal pattern has been confirmed by yesterday's move down:

Amazon.com, Inc. stock (AMZN) continued its uptrend recently, as it reached new record high above the price of $1,600. The stock reversed its upward course on Tuesday and closed below previous day's closing price. Tuesday's trading action was bearish, as the stock formed a similar to the above-mentioned bearish engulfing pattern. However, yesterday's confirmation of the pattern was weaker than Apple's. Amazon remains relatively strong vs. the rest of the market, even stronger the other big-cap technology stocks. We still can see negative technical divergences:


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