Email of the day
Comment of the Day

July 11 2012

Commentary by Eoin Treacy

Email of the day

on the Nasdaq-100:
“I reviewed the Tech sector today and noticed the large number of patterns suggesting a serious medium-term breakdown from the recent rally after last year's highs, in the short term of course not helped by AMD's poor guidance yesterday. It was a sector you thought would outperform, but even majors like IBM now look very weak? I have been away and maybe missed a change of heart?

P.S. QLD and DELL have unusual deep breaks on their charts that look like a data glitch - could you please verify?”

Eoin Treacy's view Thank you for pointing out the gaps in the charts for DEL and QLD which have now been corrected. The Nasdaq-100 found support in early June in the region of the 200-day MA and the upper side of the underlying trading range. It bounced impressively and had become somewhat overbought in the short-term by the end of the month. I sounded a warning note for the Nasdaq on June 28th when a number of the index's best performers hit at least short-term peaks following very impressive advances. The Index will need to find support above or in the region of the June lows during the current retreat if the medium-term upside is to continue to be given the benefit of the doubt.

In a comprehensive review of the Autonomies posted on July 3rd a number of shares such as Intel, Microsoft and IBM had found at least short-term support in the region of their respective 200-day MAs. They have since weakened and upward dynamics are now required if the medium-term upside is to be given the benefit of the doubt.

Following a click through of the Nasdaq-100 this afternoon, technology shares have experienced perhaps the greatest degree of trend inconsistency while healthcare related shares have outperformed. A significant number of companies related to cloud computing have sustained moves below their respective 200-day MAs and they will need to push back above their trend means to begin to suggest returns to demand dominance.

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