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Nasdaq 100 Shows Significant Weakness

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The Nasdaq 100 Silver Cross Index (SCI) shows the percentage of NDX stocks with the 20EMA above the 50EMA (an IT Trend Model BUY signal). The current reading is 56%, which is pretty weak, so we must wonder if it will go lower, or if it is about to improve. To answer that question we look at the bottom two panels on the chart, which show the percentage of stocks above their 20EMA and 50EMA. Their readings are 41% and 45% respectively, which is bearish. Let's look at why that is.

Exponential moving averages (EMAs) always move toward price, so if price is above the EMA, the EMA will be moving up, and vice versa. In this case, price is below the 20EMA on 15 of the 44 stocks that still have a Silver Cross. This is pulling the 20EMA down, closer to the 50EMA and a potential downside crossover. However, the 20EMA can't cross down through the 50EMA unless price is also below the 50EMA, and currently price is below the 50EMA on only 11 of the stocks 44 which still have a Silver Cross. This is still a negative picture.





One of those stocks is Apple (AAPL), so let's look at that chart for clarification. Currently AAPL is below its 20EMA and 50EMA, and, unless it moves sharply back above those EMAs, a downside crossover will probably take place today or tomorrow.


CONCLUSION: We can't know the future, but the Nasdaq 100, a premier blue chip market index, is showing considerable weakness and is poised to get even weaker in the days ahead.



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Carl Swenlin
About the author: is a veteran technical analyst who has been actively engaged in market analysis since 1981. A pioneer in the creation of online technical resources, he was president and founder of DecisionPoint.com, one of the premier market timing and technical analysis websites on the web. DecisionPoint specializes in stock market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and blog contributor. Learn More
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