Nasdaq hits strong resistance

Unsurprisingly, the Nasdaq has once again underperformed because of its large constituents of technology companies. It has stocks that pay no or low dividends and were driven higher in the past by hopes that we will see strong, sustainable, economic growth. In other words, undesirable companies in the current economic environment.

The Nasdaq hit resistance at 12210/15 area on Monday, a level which marks the low point from last year. It has since fallen back below last week’s high at 12113ish.

Remember that it was a strong performance from the markets last week and the apparent failure of the bulls to show up despite that, is rather bearish.

Of course, it is not the first time we have seen such a scenario. This is precisely how a bear market is meant to look and feel like.

Assuming the bulls will stay largely away, the Nasdaq could drop to 11720 from here, which is the base of the previous breakout last week.

Thereafter, the June low comes in at 11037.