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The Battle of the Nasdaq-100

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The Triple Qs are up 85 cents, but there is a battling raging under the surface. Gains by the #3 and #6 largest components are being offset by losses from the #1 component.

Nasdaq-100 Daily Chart

After finding support at $40, the Nasdaq-100(AMEX:QQQ) has mounted a small three day rally. There is little upside room, but the Qs are once again about getting ready to run into resistance. The May downtrend has been quite menacing, and this time the 50% retracement level is jumping in to add extra resistance. But this is just a composite of individual stocks, and as they go, so with go the Nasdaq-100.

Qualcomm Daily Chart

Ah the yoyo that is Qualcomm (NASD:QCOM). Just when it looks like the stock is going to breakthrough resistance at $65, it quickly drops down to support at $55. On Tuesday the stock gapped down $2, and today it has gapped up $3.60. The abrupt island reversal once again has the stock getting ready to test the $65 to $67.50 resistance area. If the Nasdaq-100 wants to move higher, its third largest component is going to have to clear this area.

Amgen Daily Chart

The Nadaq-100's sixth largest component Amgen has also been on a wild ride lately. As the stock continued to crash through support levels, it looked bound for $50. On 7/18 AMGN suddenly reversed course, and jumped to $60.50. Amgen stalled there for three days before falling to $58 to regroup. Yesterday's positive earnings have boosted the stock above $60.50, but it doesn't get any easier from here. Resting at $62.91 is the last retracement level and both moving averages. This might be enough resistance to suppress any further advances.

Microsoft Daily Chart

While some of Nasdaq-100's larger components are testing resistance, its largest is getting ready to test support. For the second time in three weeks, Microsoft looks like it wants to test $64.50. The stock does look oversold from a stochastical standpoint, but the upside could be limited by the big gap that formed on 7/20. As long as support holds, the Nasdaq-100 could be okay.

Jeff Canavan
Assistant Analyst

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