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Chart of the day: Warning signal for Nasdaq
Graphic: SCMP
Graphic: SCMP
It took seven whole years for the tech-heavy Nasdaq Composite Index to break above the record high of 4,800 points set in 2000. Since then, the rally had kept to a steep but narrow trend channel throughout last year – until possible over-exuberance set in this year. After gapping lower in March, the index retested the 200-day simple moving average this week. With so many investors favouring the index tracking and momentum trading styles, the risk is they will all be bailing out simultaneously. The 50-day moving average has turned down, and were it to cross below the 200-day one, we would get a “death cross”. This could trigger the exodus we are worried about.

Nicole Elliott is a technical analyst

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After graduating from the London School of Economics, Nicole started her banking career in London in 1982. Whether in trading, sales or an advisory capacity technical analysis has been the bedrock of her methodology. She has a wealth of markets experience including foreign exchange, money market, fixed income, stock indices, derivatives and commodities. She has spoken extensively on the subject, at conferences, to the press and on television, covering both market views and also teaching Technical Analysis. She is a published author and a recognized expert on Ichimoku Cloud charts.
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