Pullback Time...

Well Traders, the moment I anticipated has arrived. The $NDX has finally begin pulling back. You will see on the chart (click on it once or twice to enlarge, then use the "back" icon on your browser to return to the blog) that several weakness indicators have formed. First and foremost, the index itself has peaked and has begun to fall. By doing this, I am now able to establish a new diagonal resistance line based on the last two peaks. As you will note, if things go as planned (which is usually a 50/50 chance in the markets), then this trade should be successful by the angle of the diagonal resistance. You will see, it falls below my Bear Call before the Expiration Date meaning this trade would be successful.

Second, the MACD has peaked and is now showing weakness.

Third, the STO has peaked and is now showing weakness.

Now comes the interesting part. How firm is the $1,824 support going to be? Remember, this used to be resistance, and the rule goes, former resistance, when broken, becomes support. You can see the index did hit that level today, then retreated, meaning the support held. We'll have to see what happens in the upcoming days/weeks and see what holds true.

As of now, from what I can see developing, things look to be okay for this trade. Let's hope that remains true for 4 more weeks.

Happy Trading!