NDX, a key retrace and the 200 weekly
thumb_2.5.10_index_ndx_w_--_nasdaq_100_total_return_index_xNDX (Nasdaq 100) is at an interesting inflexion point, after having corrected 10% off the January highs. Friday's decline was swift, but the tech heavy index managed to snap back and get a close, once again, above the critical 1744 level, which represents 23.6% (76.4%) of the 2000/2002 bear market. Right below Friday's lows is the 200 weekly moving average, a battle zone that once breached on a weekly closing basis can produce multi month sell-offs, as in February 2001 and September 2008. On the other hand, rallies above that moving average can last years, as we saw from 2004 to 2007. We made a clear break above in November 2009, now comes the retest. Unlike SPX (S&P 500), NDX has not made a new decade low in 2009. A bullish divergence to some, a new low waiting to happen for others. Time will tell, but NDX more often than not leads the market, so pay attention to what it does in the coming days/weeks. What is particularly interesting is that we are seeing the same confluence we saw in September 2008: 1744 and the 200 weekly. It's a little lower now, at 1701, but close enough on a macro level, especially considering the actual low we made on Friday at 1712. There is a lot at stake in this chart for both bulls and bears. Whoever wins this round going forward could keep control for some time to come.