NDX update
thumb_8.29.09_index_ndx_d_--_nasdaq_100Last week, we noted that if NQ (NDX futures) made a strong break above 1637, we would have updside risk to NDX 1670/1672. Friday's blow-off tagged 1668, just a few ticks shy of the September 26 2008 gap of 1672.04 (QQQQ was more precise, that same gap is at 41.08, the high was 41.08). This move occurred right at the open, but reversed within 10 mns, a classic case of "gap and crap" and NDX closed the day below Thursday's high and back inside the ascending (rising) wedge. Furthermore, we had heavy confluence with Nasdaq 50% of the bear market at 2063 (high was 2059.48). The selling off new highs was fast and brutal and would qualify as a blow-off top if confirmed. It seems lots of computers were waiting for this event to pull the plug, or at least lighten up. On the Live Monitor, we had been patiently waiting for this move and immediately sold an October bear call spread when it happened, right at the open. We will see how events unfold over the pre-holiday week, but with Investor Intelligence bears at 19.8% (the lowest reading since 2007), and everyone calling an end to the bear market, odds keep growing that greed will get punished and much more than people expect. For now, keep trading light if at all.

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