Nasdaq Index (-14.2 or -.19%) – ETF is QQQ
Nasdaq dropped a small amount today. After breaking out to an all time high last Friday, the index has dropped to the previous breakout level. Generally, previous resistance levels, where sellers become aggressive, become the new support levels, where buyers step in. Prepare for another leg higher after the gap fill to 7400.
Setups for Nasdaq (the ETF that most closely follows Nasdaq is QQQ):
Day traders: Buy the gap down if Nasdaq opens at around 7400 on Thursday morning (3/15) and sell once the gap fills. Use a tight stop loss. For reference, a drop to 7400 on Nasdaq would be equivalent to the price of 170 for QQQ.
Swing traders: Be more patient and look to buy Nasdaq on the next pullback into the 7300 to 7400 range. Notice the green line in the chart above (20 day EMA), and how the index bounced off that level 5 out of 6 times in the past 6 months.
S&P500 Index (-15.83 or -.57%) – the ETF is SPY
In the past week, the S&P500 chart looks similar to the Nasdaq chart although it is significantly weaker. The 2700-2725 range is an intermediate support, so look to buy (go long) when the index reaches this point. The best setup for buying is a gap down Thursday morning.
Dow Jones Index (-248.91 or -1%) – the ETF is DIA
Out of the three major indexes, Dow Jones is clearly lagging behind. Dow Jones is testing a minor support level in the 24500 – 24750 range. Like with the other indexes, look to buy Dow Jones on a gap down tomorrow. Dow Jones will likely test the February lows of 23750 if it can’t hold the 24250 level.