Technicals - Nasdaq - reason for caution

Angela Mangan

QMG Pty Ltd

The Nasdaq Composite index is overbought and is located near key resistance of the long-term upward trend channel that originated in 2008. It is now also located at overbought levels on a momentum / RSI basis which is reason for caution relating to the sustainability of the current rally. 

However, it does need to be emphasised that the RSI is not a timing or turning point indicator - it flags overbought situations, but does not provide an indication of when this overbought situatiion is likely to correct.

A technical top formation is the requirement to indicate that the corrective phase has commenced and to generate a technical sell signal - and there is still no sign of this emerging on the Nasdaq (unlike the Dow Jones and S&P500 indices which have completed technical top formations/generated sell signals).

The bottom line is the Nasdaq is located at the upper end of a long term trend channel and is in overbought territory which is reason for caution.

Angela Mangan
Angela Mangan
Technical Analyst
QMG Pty Ltd

Angela has over 30 years experience in the technical analysis field. She provides technical analysis coverage of major Australian and global stocks / key markets, including provision of a bespoke technical service to wholesale clients.


I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.