There were lots of hints that the gap wouldn't hold this morning, and for maximum benefit the low risk entry to the downside was just a few minutes after the open. The Advance/Decline chart showed selling outweighed buying in the first few minutes and continued throughout most of the day. Having entered at the open one has a nice buffer in which to ride out some of the intraday noise while still being able to ride the downtrend throughout the day. The other technical that weighed heavily in the favor of selling today was that the gap opened well above obvious resistance I pointed out yesterday were the horizontal resistance intersected with the downward trendline on the daily chart.
On Monday watch the 1790 area where the NDX closed today as there is NO PRICE SUPPORT between 1790 and 1750 so it will likely fall a quick 40 points to 1750 if 1790 doesn't support. I've posted another 30 minute chart below to illustrate this in more detail.
If we end up with a bullish day on Monday I'd look for an upside target of 1821 for starters, but it will first have to clear 1800 to get out of the woods. If it can't get above 1800 the possibilities favor a retest of the 1750 area.
NDX Daily Chart: Note that the downtrend is still entact on the daily chart despite the gap up this morning. The buyers just aren't ready for a real rally yet.
NDX 30 Minute Chart: Notice precarious area below 1790 (the cliff)
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