Nasdaq-100 ‘Stuck on an Island’

The Nasdaq-100 bars painted a bearish reversal pattern in early December. We’ve just seen the effects of this reversal pattern, but as long as trade remains about this support, there’s no reason to worry.

On December 3, the Profit Radar Report took a closer look at the Nasdaq-100 and stated:

The Nasdaq-100 bars are painting a picture (almost looking like an island reversal) that’s similar to prior reversal patterns (see blue circles). This is a potential red flag, but unless support at 4,285 and 4,210 is broken, it’s premature to worry.”

The reversal pattern delivered again, like it did a couple of times earlier this year.

Thus far, the Nasdaq-100 found support at 4,216, so there’s no reason to worry.

Support at 4,209 is backed up by 4,180. Only a move below 4,180 may draw trade towards the open chart gaps.

The biggest open chart gap for the QQQ ETF (Nasdaq: QQQ) is at 100.26. We may not get there, but if we were, it likely would be a good buying opportunity. Overall, I expect new highs later this year or early next.

Recent Profit Radar Report analysis for the S&P 500 is available here: S&P 500 Suffers from Lack of Participation

Recent Profit Radar Report analysis for the Dow Jones is available here: Dow Jones Repelled by 12-year ‘Insider’ Resistance

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF to get actionable ETF trade ideas delivered for free.

 

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What the Seasonality Chart Predicts for Apple (AAPL)

Many forces affect the market and individual stocks. Seasonality is one of them. In fact, AAPL seasonality shows a distinct drop in September, which is when AAPL started its 45% decline. Here’s the full seasonality chart.

In September 2012, Apple (NasdaqGS: AAPL) accounted for 20% of the Nasdaq-100 and 5% of the S&P 500 (NYSEArca: SPY).

AAPL was the single most influential stock in the financial universe, the MVP of the Nasdaq and S&P 500.

It was back then when I decided to put together an Apple seasonality chart for Profit Radar Report subscribers. Apple seasonality is based on daily price action going back to 1998, which is the year Steve Jobs came back to U-turn Apple from near bankruptcy to profitability.

Since 1998, AAPL has gone from $1 to $100, so the seasonal bias is distinctively bullish in most months. The biggest exception is September.

AAPL seasonality was one of the reasons why the Profit Radar Report turned bearish on Apple and issued this, at the time shocking recommendation, on September 12, 2012:

“Aggressive investors may short Apple (or buy puts or sell calls) above 700 or with a close below 660.”

AAPL seasonality shows some weakness in mid-July, but projects higher prices from early August to mid-September.

The interesting thing about AAPL seasonality is that it doesn’t really match up with S&P 500 seasonality. The 2012/2013 AAPL bear market has shown that the S&P 500 (SNP: ^GSPC) doesn’t have to move in the same direction as AAPL.

Although AAPL is only 5% away from its all-time high, AAPL lost its dominance. Today AAPL makes up ‘only’ 13.24% of the Nasdaq-100 and only 3.22% of the S&P 500.

That’s because other stocks like Google, Microsoft and Amazon have rallied, while AAPL is trying to recover from its bear market.

Obviously, seasonality is only one factor that affects stocks. Here are five other things to consider about Apple:

3 Reasons Why Apple is a Buy – and 2 Reasons Why Not

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Did the Nasdaq Just Start a Prolonged Head-and Shoulder Decline?

If it looks like a duck, quacks like a duck, and walks like a duck, it’s probably a duck. This could be trouble, because the Nasdaq looks like it’s at the beginning stages of a bearish head-and shoulders pattern.

If it looks like a duck, quacks like a duck, and walks like a duck, it’s probably a duck.

If it looks like a head-and shoulders pattern …

Unlike a duck, a head-and shoulders pattern is never fully confirmed until it’s completed. Nevertheless, the  Nadsaq-100 and Nasdaq Composite (Nasdaq: ^IXIC) charts show a near perfect setup for a head-and shoulders top.

The April 20 Profit Radar Report, which featured a forecast for the week ahead, saw the potential for a head-and shoulders pattern when it wrote that: “Up side looks to be limited. The Nasdaq might be carving out a bearish head-and shoulders pattern.”

As the blue oval highlights, yesterday’s (Thursday) pop carried the Nasdaq right against double resistance, forming a potential right shoulder.

According to technical analysis rules it will take a drop below the neckline at 3,415 to trigger the actual pattern and down side target, but Thursday’s Profit Radar Report published the chart above and noted that: “This is a low-risk setup to go short the Nasdaq-100.”

Continued market forecasts are available via the Profit Radar Report.

Bearish seasonality compounds the potential danger for the Nasdaq and S&P 500. Here’s another revealing chart:

Historic S&P 500 Seasonality is About to Turn Ugly

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Apple Deprived Russell 2000 Rejected by Triple Resistance

Thursday was a great day for Apple, an average day for indexes with some exposure to Apple, and a forgettable day for ex-Apple indexes. This raises the question: How strong (or weak) would this week’s market action be without AAPL?

On Thursday the Nasdaq-100 (Nasdaq: QQQ) was up 0.96%, the S&P 500 (NYSEArca: SPY) 0.17%. But the Russell 2000 (NYSEArca: IWM) was down 0.24%.

What’s the common denominator of this fragmented performance?

Apple! AAPL soared 8.20%.

AAPL accounts for 11.78% of the Nasdaq-100, 2.80% of the S&P 500, and zero of the Russell 2000. Thursday was Apple-day. The more Apple, the better.

How would the broader market have fared without Apple’s boost?

One way to find out is to look at the equal weighted Nasdaq-100 ETF (QQEW), which was down 0.01%.

Another way to find out is to look at the Russell 2000, although representing a different market segment (small caps), which is totally Apple free.

The Russell 2000 was rejected by resistance cluster at 1,147, 1,160 and 1,165.

The performance of lesser or non-Apple exposed indexes cautions that the broad market is weaker than it appears.

In fact, the Nasdaq chart shows an immense amount of potentially bearish energy. More details here:

Did the Nasdaq Just Start a Prolonged Head-and Shoulders Decline?

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Is Nasdaq Underperformance Bearish for the Whole Stock Market?

Friday was a bad day for stocks, particularly the Nasdaq. The Nasdaq’s underperformance reflects a shift of investor sentiment, but not all is bad. In fact, there’s one short-term silver lining for the Nasdaq.

Today the Nasdaq Composite (Nasdaq: ^IXIC) lost 2.6% and closed below the 100-day moving average for the first time since December 31, 2012.

Is that bearish for the overall market?

The Nasdaq Indexes (Composite and Nasdaq-100) have been lagging the S&P quite significantly for a few weeks.

Purely statistical, the recent spread between the S&P and Nasdaq is quite rare and does not consistently foreshadow trouble ahead.

However, it does reveak that investors are developing a degree of risk aversion not seen in all of 2013.

The April 2 Profit Radar Report featured this chart of the Nasdaq-100 and cautioned that a move above resistance was needed, otherwise this week’s S&P 500 break out would turn into a fake out.

By today’s close the Nasdaq arrived at the bottom of the short-term trend channel and at the top of a long-term trend channel (I’ll write about this long-term channel in detail next week).

If the Nasdaq is going to bounce (at least short-term), it should do so around the current convergence of trend channels. Further weakness will caution of more down side.

Simon Maierhofer is the publisher of the Profit Radar ReportThe Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Nasdaq VIX Soars to 5-Year Extreme

Investors may not be aware that there is a VIX volatility index that measures expected volatility (and fear) for the Nasdaq-100. Currently, investors fear a Nasdaq breakdown much more than an S&P 500 breakdown. In fact, fear is at a 5-year extreme.

Here’s an intriguing phenomenon: Since March 14, the S&P 500 VIX (Chicago Options: ^VIX) dropped 19.1%. The Nasdaq-100 VIX (VXN) lost only 4.2% (see first chart).

VIX vs VXN

Since March 19, the S&P 500 VIX is down 4.7%, while the Nasdaq-100 VIX is up 11.5%.

Just like the S&P 500 VIX, the Nasdaq VIX is a measure of expected near-term volatility.

This short-term divergence suggests that investors are more concerned about a possible Nasdaq (Nasdaq: ^IXIC) breakdown than an S&P 500 (NYSEArca: SPY) breakdown.

But is this diverging of expected volatility significant?

To make the divergence between the VIX and VXN easier to visualize I’ve calculated the VXN/VIX ratio.

VXNVIXR

The VXN/VIX ratio just spiked to 1.26, the highest reading in 2014 and 2013. In fact, 1.26 is a 5 ½-year high.

We haven’t seen too many extremes in the past few weeks, so I wanted to see what effect large VXN/VIX spikes (basically a ‘risk off’ signal) have on the S&P 500 (and Nasdaq).

The conclusion is quite enlightening. A chart plotting the VXN/VIX ratio against the S&P 500 (going all the way back to 2006) along with what it means for stocks going forward was featured in yesterday’s Profit Radar Report.

A more detailed short-term forecast is available here (for free): S&P 500 Short-term Outlook

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Technical Support Buoys Nasdaq … For Now

Friday’s market action was unusual as stocks didn’t rally into the close to cap the week with a happy end. Despite a rough week for stocks though, the Nasdaq Indexes and Nasdaq ETF stayed above important short-term technical support.

On Friday I tweeted a picture of an important technical support shelf for the Nasdaq-100.

Here’s a closer look at important near-term support for the Nasdaq Composite, Nasdaq-100, and Nasdaq QQQ ETF (Nasdaq: QQQ).

Nasdaq-100 Support

The chart shows support around the January 22 high (which is also the March 3 low) and the October 2000 monthly candle high (lower green line).

Nasdaq QQQ ETF

Technical support for the Nasdaq QQQ ETF is around 88.90.

Nasdaq Composite

The Nasdaq Composite found support exactly at the January 22 high (which is also the March 3 low).

The 78.6% Fibonacci retracement of all points lost from 2000 to 2002 is at 4,271.

Rising trend channel support is at 4,222 and the 50-day SMA at 4,207.

We don’t draw those support levels, the market does (we just connect the dots).

In addition to the subtle Nasdaq clues, there’s been one ‘tip off indicator’ that’s kept investors on the right side of the trade, and it’s not one often talked about:

Leading Indicator: What the Yen Carry Trade Predicts for Stocks

Simon Maierhofer is the publisher of the Profit Radar ReportThe Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.