The Nasdaq Composite Index fell -408 points at one point in today’s trading. It is now down -334 points or -1.80%. This is its worst decline since April 30 when the index fell -2.04%.
What did the pullback do technically?
The Nasdaq index retreated from the 38.2% decline.
The Nasdaq Composite reached a low of 18238.78 today. That was enough to push the price below its 50-hour moving average at 18273.95. However, the price was unable to break below the 38.2% retracement level of the last uptrend move that started at the June 24 low. The 38.2% retracement level comes in at 18222.50.
If the price can’t go below the 38.2% retracement level of the last move in the trend, are the sellers the winners? The answer is no. A correction is just a normal condition in a bull market. The buyers are the winners.
So, going forward, for an increase in bearish bias, watch the 38.2% retracement level for evidence of an increase in bearish bias from a technical perspective in the Nasdaq. Moving lower, traders will start looking towards the 50% midpoint of the same upside move at 18083.94 as well as the rising 100-hour moving average (blue line on the chart above) which is currently at 18008 and moving higher towards the 50% midpoint in the process.
If in the future we can break the 100-hour moving average and the 50% level, it will increase the bearish bias of the indicator.
Incidentally, the July 1st low stopped at the 100-hour moving average before bouncing back to the upside. On June 24th, the low reached 17494 when the 100-hour moving average was at 17441. Although there were 53 points from each, it showed that buyers were ready to step in ahead of this key moving average.
So far today, buyers have done their job.
They bought at 38.2% and managed to fend off the sellers. They kept control and still won. The sellers? Still lost.