A deteriorating volume picture combined with recent price action raises the risk of an important downturn for the Nasdaq, according to David Sneddon and his team at Credit Suisse in London.
A look at a daily Chart of the Nasdaq 100 shows how the recent aggressive sell-off saw price close below “neckline” support. This support came from the August base and 38.2% retracement of the rally from August at 7744/22. Sneddon also notes how On-Balance Volume is trending lower and starting to accelerate (lower pane), which he thinks raises the risk of seeing a more important downturn.
Support is next seen at the 50% retracement of the rally from August at 7666. More significant support, however, will come from the lower end of the converging range of the past two months at 7593/81 and this is where Sneddon expects a new attempt to find a floor.