Yesterday's market action was negative.
The Nasdaq Composite fell 2.19% in far above average trade, (Point A). This would normally indicate aggressive institutional selling however with yesterday being the 3rd Friday in the month, it was an options expiration day, which always inflates trading volumes and makes the market more difficult to read.
Leading stocks action was negative.
The market looks to the layman like it's in real trouble. After digging deeper and wading through countless charts of leading stocks, my opinion is that it looks much worse than what it is. My take is that investors had become far too bullish and optimistic which always spells trouble. I think the recent 5 week correction, which is currently 6% in depth (Point B) is a temporary dip and will soon find a floor.
Right now the Nasdaq is trading in an area where there is a tremendous amount of support. I've been recently mentioning a wall of support from 3000 to 3040, however it extends even further.
As well as the Nasdaq having strong support at its 200 day moving average which is around the 2970 level (Point C) the support wall actually starts at 2942 (Point D). My short-term stance remains neutral.
The 600 appears to have found some solid support at the level its currently trading at. The Nasdaq fell for the week but technically its weekly trade behavior looks worse than it really is due to inflated volume on Friday 19th October. This was due to options expiration. I'm expecting the institutions to step in an aggressively buy very soon.
Please note past performance should not be used as a guide to future performance, which is not guaranteed. Investing in Funds should be considered a long-term investment. The value of the investment can go down as well as up and there is no guarantee that you will get back the amount you originally invested.
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