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Chomping at the bit

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One day their up, the next day they're down. It's morning's like we're seeing this morning that has bulls chomping at the bit to get long some technology stocks as the sharp down days are easily pushed aside.

The NASDAQ Composite (COMPX) recently violated upward trend, but has been able to hold a retracement level near the 1,741 level, which would mark a 50% retracement of the post terrorist attacks low to the December/January highs. From a risk/reward perspective, bulls want to get long as downward trend is "way above" at 1,865. If that is the case, then a tight stop under Monday's low of 1,732 should be honored.

NASDAQ Composite Chart - Daily Interval

Perennial bulls are most likely chomping at the bit to get long the NASDAQ Composite or many technology stocks. If that is the case, the trader should enter with a short-term trade in mind. The trending lower 50-day MA and 200-day MA along with downward trend will most likely provide formidable tests for a bull's resolve.

Jeff Bailey
Senior Market Technician
Option Investor

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