Nightly Update - NDX, BPNDX, SML, & SNDK
The Nasdaq 100 Index (NDX) - Daily Chart
The NDX is the cash index. I usually don't update the NDX. I normally update Nasdaq 100 Index futures. NQ is the symbol for the The Nasdaq 100 Index futures. NQ is completely different from the NDX cash index. The price that I am watching for a reversal on NQ futures, is 1706. Yesterday, NQ came close to taking out 1706 and is now reversing up at 1720. The number to watch for a reversal to the down side on the NDX is at the 50 day EMA, which is 1690. If you don't have futures, you can focus on the NDX. There was not much volume on the indexes today. It was a trade by appointment only type of day. Consequently, I don't trust anything that went up or down on light volume. However, chips did well after hours on good volume. SNDK did well on volume. Tomorrow is a holiday and Friday the market is closed. As far as the charts go, the market has an attention span of a gnat.
The Nasdaq 100 Bullish Percent Index (BPNDX)- Daily Chart
The daily chart of the BPNDX illustrates that it is in a falling wedge reversal pattern. As you can see, the BPNDX has broken out of the wedge. This means that the NDX is getting buy signals. This looks like a double bottom. There is divergence showing up in the indicators and oscillators, which is bullish. This chart also indicates that less nasdaq 100 stocks participated in the January rally. Only a few front runners such as GOOG, AAPL, ADBE, SNDK, & MRVL are participating in the NDX rally. I generally like to play the stocks that are in the same pattern as the NDX because that means they are a truer reflection of the indexes performance. Furthermore, if they are front runners, they will also exaggerate the move of the index on up days and also on down days. Just a handful of stocks can be a direct reflection of an index.
The S&P 600 Small Cap Index (SML)- Daily Chart
The daily 6 month chart of the SML illustrates that it has been trading in an uptrend channel since it placed it's lows in October 2005 at 322.92. As always, the general rule of thumb is, that higher highs are bullish. However, the SML is currently back testing the uptrend line and the 34 day EMA. As long as the SML stays within this bullish channel it will perform well. Indicators and oscillators are pulling back along with price.
SanDisk Corp. (SNDK)- Daily Chart
The daily chart shows that SNDK has been in a wave 3 to 4 correction since the beginning of this year. Now, however, the correction lows have been put in. So far SNDK has held above it's 200 day moving average nicely @ $52.15. SNDK has now broken out of the continuation wedge. SNDK is now pulling back on light volume to fill the gap at the $58.00 area. Indicators and oscillators are bullish, and showing bullish divergence. The reason I am updating SNDK today is because I think a lot of traders in the trading room are possibly over leveraged in this stock. If you are over leveraged, tomorrow will be a good day for you. I believe SNDK will gap up. This will be your opportunity to lighten up your position. Next week SNDK will be added to the SPX. If $65.76 fails to be taken out, then SNDK will be trading in its own channel up. If $65.76 is taken out then SNDK will rally well. If it gaps up at the open lighten up your position.
