Everyone’s heard of a double-top, or the even more rare triple-top. How about an octo-top? When it comes to the NASDAQ composite, the embodiment of “everything is awesome, so buy-buy-buy!” it seems it can’t get enough of its 5132 high from October 2000.
This is one of those indices that shouldn’t even be charted anymore. Its charts are that silly. But, for those who are curious, read on.
When we last examined it on May 16, COMP had undergone only 7 failed attempts to retake 5132. It was hurtling southward in a reasonably well-formed falling channel, shown below in yellow. But, it wasn’t as bad as it might have been. At least the huge H&S Pattern targeting Armageddon hadn’t played out.
The old expression “rising crude light lifts all boats” certainly applied here. When CL bottomed and began its doubling on Feb 11, COMP caught fire. The ensuing 18% rally, however, wasn’t able to break out of the falling yellow channel. Caught between a rock and a bearish place, COMP was heading south, again, destined for an important test: the midline of a very large rising white channel.
If they can hold it above the white midline, then the next upside targets are the bundle of moving averages at 4815ish, followed by the yellow channel top at 4950. If it can break out, then new highs aren’t that far away.
If, on the other hand, COMP breaks down below the white channel midline at 4673, the next support is the yellow midline around 4500, ideally in mid-June, followed by the red neckline at 4440-4480 and the previous low and white channel .236 line at 4116.
luck central planning could have it, the white midline held. COMP bounced at 4678 (versus 4673) a few days later, and took another shot at breaking out of the falling yellow channel. This one didn’t work either. It shot up 11 points higher than it had in April… then plunged back below the white midline following the Brexit vote.
In so doing, it almost reached the 4500 target we’d anticipated. It certainly would have made sense, as that was also the yellow midline, the red midline, and the (red) .618 retracement of the rise from 4209 to 4980. Like I said, things are just silly with COMP.
Apparently, everyone agreed that the departure of one of the largest and few remaining stable members of the EU simply wasn’t all that important. Just as quickly, they decided that the midline breakdown didn’t matter. COMP leaped back above the midline, the yellow channel top, and — drum roll please — the 2000 highs.
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