Yesterday price in the NASDAQ composite stretched to a new swing high. We poked up above and no follow through occurred. One of our favorite trades as of late has been the false bear technical patterns. This means, we wait for a technical chart setup which favors the bears occurs, then we watch to see if it follows through. If it doesn’t, then you pile in, essentially calling the sell flow’s bluff. The moves occurring after false moves are often vicious. The effect may be similar into the close of this week, should the sell flow continue overpowering demand.
It will be a more difficult task however, for the long term control of the market is controlled by the buyer. This can be seen as a series of higher highs and lows on the daily and weekly charts of the NASDAQ composite. It has been a resilient bull, and it certainly is an aging bull, but it’s still a bull until proven otherwise.
Intermediate term, we have a solid balancing act occurring. This balance area continues to grow, and I continue to profile it for our benefit. The intermediate term can be seen transitioning from buyer control to balance when a series of higher highs and higher lows became sloppy and now we are seeing indecision. I have highlighted some interesting levels on the following micro composite of intermediate term balance:
The short term timeframe is controlled by sellers. They have successfully pressed price and value lower since yesterday’s new swing high and have successfully negated the buying tails we have seen on recent market profiles. We are set to open inside range, slightly inside value as of this post, which presents a medium risk intraday environment. If price can sustain above 3675 we would negate the seller control on the short timeframe shift to a balanced focus. Otherwise, I am preparing for a test of intermediate term extremes to ensure buyers are still as confident as they were on 02/13. I have highlighted these observations on the following market profile chart: