The bell may be ringing at a top for the Nasdaq at these significant short-term AND long-term moving-averages

The Nasdaq equity markets are important not only because they represent a broader market view, but also because they tend to reflect rising or falling investor sentiment. This morning I've been preparing a number of charts that key in on the Nasdaq's position with some ideas about where it may go (see below). And I see that the venerable technical analyst John Murphy of Stockcharts.com also wrote a post about the Nasdaq Composite index, NASDAQ TESTS 200-DAY LINE - at the ChartWatchers blog at Stockcharts.com. He uses the $COMPQ while my charts have showed the $NDX poking its 200-day moving average - but they're pretty close. If you have some rudimentary understanding of moving averages, you can see what he's writing about - my chart of Nasdaq composte is at right, you can see price in-between the MA lines.

I'll make a few comments about my charts, then they are in a series below. First, the volatility index for the Nasdaq ($VXN) shows that, on the long-term monthly chart, it tested the 20-month moving average midline of its Bollinger Bands. This is fascinating to us, as we have been charting how the widely-watched VIX poked its low under a Fibonacci retracement line on April 17, in the Armstrong Economic Confidence Model's interim high time window. Next, the bullish percent for Nasdaq 100 ($BPNDX) shows that it continued to push rather high as this index poked not only its 200-day moving average, but simultaneously its 200-month moving average. When I've looked at this bullish percentage in yearly charts, I don't see a great correlation between the height of its swing highs with the relative height of the Nasdaq 100's swing highs, but it does a good job of signaling when this index is reaching some level of a swing high. For that matter, I do get the impression that the bullish percentage is working its way off a significant swing high and can be still working its way toward a multi-year or multi-decade low that will signal a more important low of the bear market, at some point - but this is a bit more conjecture on my part.

Next are my weekly and monthly charts for the Nasdaq 100 (NDX). I made some markings on these. On the monthly chart, I even went so far as to hypothesize one possible path for this index. I went with the idea of this market pulling back but not going to new lows, and then swinging somewhat higher into the end of this calendar year. This should not be viewed as my preferred "count" or prediction - I really do want to see where it goes from this key level. Then, I also included a monthly chart of the Nasdaq Composite (COMPQ). It shows this index has not yet reached up to its 200-month moving average. This suggests that, perhaps, this market will "want" to test higher to that level, whether sooner or perhaps later at the end of this year. But again - I'm not fine-tuning a count or prediction here. I can still see some potential for other alternatives to play out.

Finally, I've included the McClellan chart that's courtesy of DecisionPoint.com via Stockcharts.com. We did indeed see a move up in the Oscillator, as I'd wondered based on what looks like a declining triangle. But I don't know that it "needs" to continue pushing higher - I think there are reasons to think that this Oscillator looks like it's wearing out and will drop lower. Still, we've got to respect for the longer term, the fact that the Summation Index remains strong. Since the Summation Index is a longer-term indicator than the Oscillator, it suggests that this market remains in a relatively strong position even with a pullback that may be approaching. If and when the Summation Index rolls over, then we can get more concerned about what lies around the corner for the Nasdaq over the longer term. I cannot be convinced that the strength of the Summation Index states that a new bull market is underway. Maybe, theoretically at this point, the Nasdaq won't go under its 2002/2003 lows (personally I think it is likely to go to new lows). Eventually, I can agree that the Nasdaq is likely to be an important component of the next bull market, especially in sectors like biotechnology. But I do think the bear market is not over and that the Nasdaq equity markets are not likely to get through the next big bear market low without making a new low as well.

I'd like to clarify, despite my marking of a possible path in the Nasdaq on the monthly chart of NDX, that I can also envision a scenario in which these moving averages provide enough resistance that the markets need to dig out new lows first, and then later come back for a re-test in a bigger bear market rally. I think there are arguments either way, although I haven't time to restate all of them here. Of course, there's been a lot of "discussion" here about the alternatives, and I've also pointed to AllAllan.blogspot.com where he's been pointing out a more bearish channel for the Nasdaq that would support the idea of new lows before it's ready for a more significant bear market rally. The VXN is, in my opinion, likely to move up from the significant support on its monthly chart - this doesn't have to rule out new swing highs in Nasdaq, but would be a bearish divergence indicating that new lows are likely ahead (whether sooner or later).

Just some perspective at this point, on the big picture in the Nasdaq!