A PRICE MIRROR ON THE NASDAQ TO CONSIDER
As those of you who have been following along during 2012 know, I have been rather steadfastly bullish for a great majority of the year. I was reluctant to change my opinion with respect to the market, not due to any profound fundamental insight I had, but rather due to the fact that the market had displayed a rather elegant propensity towards simplicity in its daily and weekly price patterns.
Volatility had been contained. There were few sudden jolts that had the potential to shake confidence. The market reacted at points where it needed to react, ignoring points that should have been ignored. Bad news was turned on its head and greeted with rallies.
This all changed recently in rather dramatic fashion as I began sounding warning bells about the markets in late September. Those warnings have only grown more consistent since then, even in the face of the recent short-term rally we have experienced so far this week.
My primary concern lies with the behavior of both the Dow and Nasdaq at the most critical of critical technical points. Each of their respective generational trajectory points are in play here. These trajectory points have been responsible for the resistance on the upside since 2010. These trajectory points also have a very distinct effect on the market when they begin asserting their influence: The price patterns become choppy. The rallies start becoming less predictable. Leaders begin failing. All of the things we are experiencing here and now.
Below is a chart to further illustrate the point:
click chart to enlarge
NASDAQ COMPOSITE
