Sam Collins

Nasdaq May Be In For a Tumble

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August gold fell 30 cents to $940.70. The PHLX Gold/Silver Index (XAU) lost $4.62 and closed at $139.02. But the XAU is still trading in the middle of its bullish channel and just under the 50-day moving average. Its Moving Average Convergence/Divergence (MACD) just issued a buy signal, so the best guess is that the next move will be back to the upper part of the trading channel at $152 or so.

What the Markets Are Saying

Yesterday's down volume accounted for 70% of the total volume on the NYSE, 78% on the S&P 500, and 70% on the Nasdaq. And even though volume was light, it was higher than on the days of recent gains, which is not a good sign.

There appears to be a real lack of follow-through on the Nasdaq. After vigorously breaking to a new high on June 11, the Nasdaq is looking very tired and barely able to hold above its 20-day moving average.

The low yesterday penetrated the 20-day, which is now at 1,826, and a close under it would force us to interpret the June 11 breakout as a false breakout. As I said yesterday, if that happens, look out below, because the next support for Nasdaq is at about 1,675.

All of our internal indicators are rising from oversold territory. But the advance is so lethargic that it is taking weeks to resolve a situation, which, two months ago, would have happened in a couple of days.