Update on NDX: May 30, 2016

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.

2015-12-14 NDX daily 1800As 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.2016-05-30 NDX daily 1538Hedgies 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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