State of Dow Jones - Calendar Week 41 2021

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State of Dow Jones - Calendar Week 41 2021 Welcome to the second episode of the blog post series "State of Dow Jones", where we look at the leading US stock index from different perspectives and try to determine how solid the current development is. Technical Chart for Dow Jones Every "State of Dow Jones" blog post should start with the technical chart, so here we go (created on tradingview.com): The Dow Jones overcame the old falling highs and the important resistance at 25 000, now trading at 35 294 points. The index is trading above its SMA 20 again and even went into the upper Envelope band. This means the Dow is slightly overheated and it is likely that the index will show a small pull-back before rising again. The RSI is at 60, three trendlines were identified and crossed during the last trading days. The technical chart provides us with enough confidence to say that the correction might be over and the outlook is neutral, or maybe even slightly bullish. Marke

NASDAQ 100 following a strong trendline

NASDAQ 100 following a strong trendline

I've been covering the NASDAQ 100 multiple times during the last days as you've seen. The reason for this is that this leading tech index shows an incredible strength despite the Tapering discussions and the various risks which emerged during the last weeks.

Together with you, I want to understand where the chances and risks are for this index.

NASDAQ 100 Chart

Source: tradingview.com

The image above shows a simple NASDAQ 100 chart with the leading trendlines.

As you can see, there is a corridor limited by a supporting trendline and a line which might be a resistance line. The index has touched this upper line multiple times and has been trading just beneath it for four days in a row.

I believe that this trendline is of great importance and chances are high that the NASDAQ 100 will not cross it soon (just my personal opinion).

At the moment, this trendline also crosses the upper border of the Envelopes, so there is even another resistance level there.

 

NASDAQ 100 Market Breadth Data Visualization

As usually, let's look at the market breadth data for NASDAQ 100:

Speaking of Envelopes, it is clear that the NASDAQ 100 again remained within the upper Envelopes bands. Usually, this is considered as an overheated signal on the short time frame.

The Advance Decline Line marked another high while the index itself did not - we have a very small divergence here.

The Advanced vs. Declined Data meets the expectations for a trading day with almost no gains or losses.

The McClellan Oscillator for NASDAQ 100 is still positive and therefore bullish.

The McClellan Summation Index for NASDAQ 100 remains negative, but is continuously moving upwards, which is a good sign. Please understand that the negative scale for this indicator is a bit misleading. I started generating breadth data for the NASDAQ 100 just a few weeks ago, which is why the McClellan Summation Index started on a low level. Please ignore the negative scale for now and try to see the current state of this indicator in a relation to the last trading days. If I had started generating breadth data for this index earlier, this indicator would have been on a positive scale.


Chances and risks for NASDAQ 100

At the moment, the ratio of risk and possible returns is bad because NASDAQ 100 is on a very high level compared to the last weeks. Chances might be limited due to the upper trendline and the Envelopes for now. Market breadth supports the general bullish sentiment, but gives no clear entry signal now (the last signal was a while ago). Maybe it is a good idea to wait for a setback.


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