Nasdaq is Extremely Oversold

The Nasdaq Composite has been the weakest of the main US stock indices,  on 05/12/22 it reached an extremely oversold condition.

The Nasdaq weekly chart courtesy of BigCharts.com- symbol (COMP) illustrates the situation.

Slow Stochastic is at the lowest level in five years.

The Nasdaq hourly Point & Figure chart courtesy of Trading View –  symbol (IXIC) shows an  important support level.

On 05/12/22 IXIC reached the lower boundary of five columns of Point & Figure support.

This week the decline of  the main US stock indices broke several bullish divergences which increases the probabilities  that the decline since January 2022 is the beginning of a larger  bear market.  Bear markets can have multi-week counter trend rallies.

The  Nasdaq deep oversold condition while reaching an important support level are powerful ingredients for a rally.

Traders go long  100%  non-leveraged SPX related funds at the SPX 05/13/22 open.  Use a move below SPX 3825.00 as a stop loss for 50% of the position.  Use a move below SPX 3795.00 as a stop loss on the remaining  position.

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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