Monday, February 27, 2012

SOX is Predicting NDX Decline

Last year I posted numerous times about SOX diverging from NDX. All of those times were the best shorting opportunities of the year. Today it is happening again.

While NDX is continuing to drink AAPL Kool-Aid, SOX has topped and diverged from 2/17. Let's quickly pull up 4hr chart and look at how SOX rallied to the top of the channel and got rejected twice, broke the trendline from 12/19 low, backtested it and got rejected along with the 3rd rejection at the top of the channel, and formed head and shoulders in the process. It sold off 4.6% from the top, while NDX did not even blink. Break and close below the neckline @ 418.52 will send the price to projected target of 398.41, which is also just above the 396 - 398 support zone from 10/27 and 11/16 highs.
I expect NDX to follow SOX down.

click on chart to enlarge

No comments:

Post a Comment