LIVE MARKETS-Nasdaq composite: Traders gauge internal tension

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NASDAQ COMPOSITE: TRADERS GAUGE INTERNAL TENSION

On Tuesday, the main U.S. indexes suffered modest losses. With this, the S&P 500 index .SPX ended a six-day win streak, while the Dow .DJI dipped for the first time in four sessions.

The Nasdaq composite .IXIC finished down 0.38% at 19,142.71. Over the past four trading days the tech-laden index has struggled to make progress, and is essentially unchanged over this period.

Despite this, the Nasdaq New High/New Low index (NH/NL), a measure of internal strength, finished at a more than five-month high:

The NH/NL index ended at 56.7% which is its highest level since a 59.6% reading on December 16, 2024, the day of the IXIC's record highs.

If its current rate of ascent can continue, the measure has the potential, over the next week or so, to challenge the resistance line from its early 2023 high, which is now at 73.3%, and seen as a major hurdle.

However, on Wednesday, e-mini Nasdaq 100 futures NQcv1 are suggesting the Nasdaq 100 index .NDX is poised to drop around 0.7% at the open. Thus, the composite looks set for downside follow-through when trading kicks off.

In the event the NH/NL index rolls over and closes below its 10-day moving average (DMA), which ended Tuesday at 52.3%, and its May 9 trough, at 50.5%, the composite may find itself vulnerable to a deeper pullback.

The IXIC has initial support at Monday's low, at 18,937. However, in the event it were to give way, bulls will look for the 18,472-18,068 area to provide fertile ground for a resumption of the advance.

This zone includes the top of the May 12 gap (at 18,472.71), the 200-DMA, and the Fibonacci-based 233-DMA, which now reside in the 18,375-18,300 area, as well as the March 25 high, at 18,281.

The May 12 gap requires a fall to 18,068.90 for a fill.

(Terence Gabriel)

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