In spite of the extremely negative day for stocks, the NASDAQ Composite managed to close just one point below Monday’s low, which is now very short term support.  I still believe that unless the 4000 level is taken out on the close and on relatively heavy, the NASDAQ remains in a consolidation area.

A short term down trend has been established, but I don’t believe the market positive market psychology that we have seen will be broken until 4000 is taken out convincingly.  The second chart below shows the NASDAQ as a weekly chart, and there is support at the 4000 leveling going back to November.  As for the NASDAQ yesterday, decliners led advancers by a 3.488 to 1 margin, volume was heavy at over 2 billion shares, but new highs actually were up compared to the prior day.  Also, the Arms index suggests there was strong buying in selected issues. Read full report