I don’t chart NDX very often. In my opinion, it’s one of the most manipulated indices. It constantly breaks patterns, almost always in a bullish fashion So, I was surprised in late August when it plunged to a very reasonable and predictable level. My cynicism was validated, however, by its subsequent recovery.
continued for members…NDX not only completed a .886 retracement of its rise from the October 2014 lows (a Bat Pattern), it reached the .786 white channel line in the process. It even bounced from the lows to the purple .618 Fib. And, that was pretty much it for the reasonable/predictable stuff.
The other stuff — no real Point B for the Bat, not even a pause at the purple channel bottom on the way down, a backtest that pushed well past the purple channel bottom, the rebound to the purple .618 at 4347 shouldn’t have happened so quickly, there was no backtest of the falling red channel .236 — well, I could go on for quite a while. But, like I said, it’s NDX. It’s not supposed to make sense.
The most troubling aspect was the rally back into the previously broken purple channel after the August 24 bottom (par for the course, the past few years.) The troubling aspect of it is that it didn’t hold.
NDX ran up to test the SMA100 at a very seldom-seen Fib — the .707 — and dropped back below the purple channel bottom again. This is just plain weird behavior — even for NDX.
It’s back below the purple channel now, and is acting as though it could drop down to test the red channel midline at, say, the purple .236 (3998.97.) Other better backtests would be the red .618 at 4041.80 (Sep 28) or the .886 at 3864.49 (Oct 20.)
Then, of course, it could always go up and rejoin the purple channel like nothing ever happened. And, it might. A glance at the daily RSI channel shows potential channel midline support coming up after only a slight dip.
I’ll not agonize over it too much. It’ll do what TPTB have in mind, and it might or might not make much sense. Looking at it from that standpoint, I’m rarely disappointed.