Last Thursday in the 09:00 EST Update, we updated subscribers that on the current field position for the NASDAQ-100 using the bullish percent chart and correlating against a bar chart for the NASDAQ-100 Index ($NDX.X). Today we wanted to update traders and investors in this market that the current reading is now "bull confirmed" and give some insight as to what a trader/investor might want to look for.
NASDAQ-100 Bullish % chart - 2% box
The NASDAQ-100 bullish percent ($BPNDX) had 59% (59 out of 100 stocks) recently showing a buy signal on their point and figure charts. When the 52% level was achieved, that put this portion of the market back in "bull confirmed" status, a reading not seen since April earlier this year. Last Thursday, we felt a "bull confirmed" reading (see 10/11/01 09:00 EST Update) would have the NASDAQ-100 Index (NDX.X) trading above our 61.8% retracement level of 1,348 and we've been above that level since October 11th (give or take two hours of trading on October 12th).
Traders/investors that have been trading/investing in the NASDAQ- 100 since the first reversal higher in the bullish % chart at 6% bullish should now be moving up some stops just under last Friday's low of 1,333.
NASDAQ-100 Index (NDX.X) - last six months
Tonight's earnings from some big technology stocks like Intel (NASDAQ:INTC) and International Business Machines (NYSE:IBM) are most likely going to be "make or break" for the NASDAQ-100 near- term. The internals have improved markedly since the bullish percent for this index had a reading of 0% in late September and the reversal higher from there has found the NDX.X trading just under the 50-day MA. Should the market respond favorably to tonight news from Intel and IBM and the NASDAQ-100 get above the 50-day MA, I feel a challenge of the 1,482 level can be achieved considering the internals as depicted by the bullish percent.
New positions taken on before tonight's close should be correlated against the NDX.X for weakness, which would come on a break below last weeks low of 1,333.
As it relates to risk/reward, bearish traders in this index carry the bulk of the risk heading into tonight numbers. Risk for the bears on a break above the 1,416 level (50-day moving average) is to 1,482. I think tonight's earnings reports from IBM and Intel will most determine tomorrows trading. It will most likely be what both companies say about next quarter that has the largest effect and not necessarily what type of earnings each company had in their latest quarters.