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Rolling down support

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With the NASDAQ Composite breaking to new lows once again, its that time of the week to roll down our retracement bracket and look for where market makers might be trying to control their downside risk too. Using our retracement technique of fitting the 61.8% to a recent level of support it looks like the resulting 50% retracement level at 1,655 might be the first place we see any type of serious buying.

NASDAQ Composite Index Chart - 60-minute interval.

Subscriber to PremierMarkets.com know how short/put we are this market and that's what we're concerned with. Today we added another NASDAQ stock to our short/put list in shares of Read-Rite (RDRT) and we need to keep track of where support might be for the broader market index. What I've done in the above chart is what we've been doing for months. Attaching the retracement bracket to a recent and then fitting the 61.8% retracement level to correlate with past trading in the index. The result is the 50% and 38.2% levels. These now become a bearish traders downside targets and levels where market makers that were shorting near 1,800 become buyers as they make a market and are able to buy stocks from those that need to get rid of them.

Jeff Bailey
Senior Market Technician
www.PremierMarkets.com

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