In our last update on NDX, I noted that NDX was testing key support at the bottom of a long-term channel as well as the 100- and 200-day moving averages. The index had climbed to within 1.6% of its tech bubble highs from the year 2000. New all-time highs appeared to be just ahead. But, there was a catch:
However, if investors are disappointed with the Fed’s upcoming decision, look for another test of the white channel bottom at around 3955.
As it turned out, investors were quite disappointed when, two days later, the FOMC increased its target range by 25 bps to .25 – .50% and the YE 2016 target rate to 1.375%. TPTB managed to tread water for another 10 sessions, through the end of the year.
Then, NKD broke down. It reached 3992 within the next three weeks, bounced almost 8%, then plunged below our 3955 target to complete a Bat Pattern at 3888. By the time all the dust had settled, it was an 18% plunge in about 7 weeks.Hedgies that were crowded into some of these can’t-miss stocks took it on the chin. Now that the index is back to a point of major resistance, what lies ahead?
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