Friday, March 19, 2010

NASDAQ - Bearish Engulfment



The NASDAQ has had a nice bullish run over the last 6 weeks along with the rest of the major indices. Today the NASDAQ put in what is called a bearish engulfing pattern. This pattern is a reversal pattern which may be an indication that stocks are about to pause or maybe even sell off.

I usually like to see other factors come into play to help confirm the bearish engulfment formation but as of right now I do not see any other bearish technical signals.

Given the fact that the market is somewhat overbought and we are now getting a bearish candlestick reversal pattern, it might be wise for the longs to at least tighten up their trailing stops to lock in any gains that they may have.

4 comments:

Anonymous said...

Odd, bullish on BKX and bearish on NDX.
Better to be consistent and forcast targets on both.

Eric De Groot said...

Nas & BKX technicals will be driven by the dollar. Bearish engulfing, yes. Noticed this as well. BKX also nearly critical resistance. Trouble is, traditionally uncorrelated assets are becoming increasing correlated as the dollar, as well as other fiat, remain disrepected by their custodians. We all trade in the nominal world, but nominal prices are becoming less and less important as the severity of the crisis lingers.

Don's "Trading-In-Action (TIA)" said...

Well Anonymous,
it all depends on what time frame one is talking about. U can be bullish longer term while bearish shorter term and a possible explanation is you are expecting a correction.
Generally, market is reaching a major resistance level soon and it is just normal that traders take profit rather than expecting a miracle to happen. I am sure Kevin can share with you more on his thoughts...

financial spread betting said...

Kevin, looks like your trade is playing out.

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