The last weeks were shaped by ups and downs in the global stock markets, most of the important indexes like the S&P 500, DowJones Industrial, Russel 2000… could not reach their MA200 lines since then and therefore can be counted still in a bearish trend on the long run. On the contrary to the most indexes, the Nasdaq 100 showed relative strenght and could keep it’s position above MA200 over a long time just until recently, see the chart below(Nasdaq 100 short setup):
As you can see from the price chart, just recently the faster moving average (MA21) crossed the slower moving average indicator (MA50) in the above price chart of the $NDX. This indicates a short setup as an investing position due the chosen time frame of the chart which is weekly. (Nasdaq 100 short setup)
The current situation in the markets is a bit unclear, since january 2016 indexes were falling down but could recover above the traded low of the August 2015 correction. This situation was shaped by very high volatility. What happened in the last weeks was a price recovery in most indexes up to MA50 but still as mentioned we are facing a bearish trend and therefore price movements have to be watched closely. Since mid of this week an increase in volatility charts could be observed as markets were also in a very greedy situation according to the CNN Fear and Greed index.
The comeback of the volatility in higher areas and the intersection of the moving averages in the above chart indicates that a long term short position could be traded, as long as the situation stays that way and price trade below MA21 and MA21 stays below MA50.
To trade the $NDX this could either be done directly as an index trade or via ETF/ ETNs, whereas I personally prefer ETF’s for my investment account.
Following short products could be used for the proposed trade:
I personally will wait with the trade after the easter weekend and check the price developement again, but as easter brings also lower volumes I do not expect minor movements in the next two trading days.