Binge watching the Nasdaq 100

• Posted by Greg Harmon
• on February 23rd, 2018

The Nasdaq 100 has been a spot of strength, a bright light, a ray of hope, during this last two weeks of volatile price action and market correction. It has also been a source of frustration as it has shown strength and failed to follow through numerous times. This has made it hard to look away.

But if you can, the longer picture shows some interesting strength. The chart below shows the Nasdaq 100 ETF ($QQQ) price action. It had been in a rising channel from April 2017 until it broke that to the upside at the start of January. A quick march higher topped January 26th. From there came the fast retracement. Fast at first, then accelerating as it entered the prior channel.

It stopped short of the 200 day SMA, the first sign of strength compared to the S&P 500, and reversed. this was basically at the bottom of the prior channel. It pressed back higher from there quickly breaking back over the top of the channel and retracing 78.6% of the drop. Since then it has stalled. That is not really a bad thing. Consolidating in a bull flag, it seems to be building strength.

The momentum indicators are in bullish ranges but not flexing their muscles yet. The RSI is in the bullish zone but running sideways, while the MACD has crossed up and is positive. Continuation to the upside would garner some positive press. And Friday might make that happen. Pre-market the ETF is up over 75 basis points. A break of this flag would give a target on a Measured move to 180. I’ll keep watching.

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