The Nasdaq-100 Is Flashing a Red Light

The technology space — as measured by the PowerShares QQQ (QQQ), which tracks the Nasdaq-100 — has had a great and relentless run thus far in 2013, currently shining with a roughly 20% gain. However, as we’re now in the thick of a seasonally tricky period (September through October), the going might just get a little tougher in the near-term, despite a recent break to new highs.

The long-term picture of the QQQ shows much more massive performance off the late-2008/early-2009 double bottom. Since 2011, however, the fund has traded within a defined and narrowing range, the top of which it once again tested in recent days.

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After Monday’s upside gap to fresh 2013 highs, both the broader market as well as the Nasdaq-100 gave back at least some of those gains by the end of the day. The QQQ looked the weakest as it managed to close in the red for the day, thus marking its daily chart with a very visually bearish outside day candle.

But before getting all beared-up from just one bearish reversal day, let me say that before I become concerned for longs and possibly even play the short side of the Nasdaq-100, a follow-through selling day would be needed. Such follow-through selling would thus be a confirmation of Monday’s intraday bearish turnaround.

Furthermore, as long as the QQQ remains trading above its $77.30 breakout level from Sept. 9, it remains positioned for further highs.

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Yahoo (YHOO) — a component of the Nasdaq-100 — also staged a nice breakout past near-term resistance last week. However, since then, YHOO has left a couple of worrying marks by way of bearish candlesticks on its daily chart, all of which is occurring right at the stock’s year-to-date highs.

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I am not trying to get too bearish here, but Monday’s intraday turnaround to the downside is at the very least something worth noting for now.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.

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