Dissecting Some NDX Sectors - Good News?

In late December it was apparent that GOOG was forming a wedge type pattern and January 4th the wedge was broken to the downside. At that point we used the width of the wedge at it's widest point to give us a downside target. The width was 146 points, so we measured from the break downward to give us a 520 target. (on Prophet Charts I generally draw a colored rectangle and then "duplicate" it and place it near the break to give me a visual of where the target is)

As you can see on the chart, GOOG hit this target level intraday today and then quickly bounced to finish up near the top 1/3 of the daily candle. This is some added evidence that the NDX may be putting in a short term bottom near 1700.

GOOGLE (GOOG) Daily Chart with completed Wedge Target



The Internet Index being one of the major components of the NDX has been leading the fall as you can see in the chart below. On the bullish side, the index came very close to reaching the 100% retracement and bounced up hard. On the bearish side, the upward trendline was breached today. The long tail on the daily candle today is a short term bullish indicator, but we should watch very carefully as a trendbreak is often the first hint we're given that the price will continue to breakdown.

Internet Index Daily Chart:



The Software Index broke the upward trendline yesterday but created a pretty convincing bottoming tail on the daily charts at some horizontal support levels. Although this looks bullish for the short term, the trend break paints more of an intermediate bear story. We'll watch this index carefully to see if it can bounce and then look for possible indications of breakdown.

Software Index:




Biotech appears to have found some short term short here, but like all the others it's broken the longer term upward trendline which I view as intermediate bearish. The key will be to watch if this index can reach and hold above the 790 area. It must hold 790 or there is a probility that the 725 area will be tested again and may even put in lower lows.

Biotech Index Chart:



Looking at the Weekly Semiconductor Index Chart we see that it's retraced 100% from it's January 06 highs. While this is short term bullish, 2 1/2 year upward trend was broken in late December 07 and paints more of an intermediate bearish picture. Watch for a retest of the upward trendline as this will likely act as resistance before another move down. If it can reach and hold above 410 it would have more of a neutral bias -- otherwise it will remain intermediate bearish.

Semiconductor Index Weekly Chart: