NDX Technical Analysis
· I warned about the Spinning Top (almost a Shooting Star candle) on 5 October; it was a yellow/red flag in combination with being well above the upper Keltner channels and a weakening Bullish Percentage Index and Up-Down Percentage.
· I mentioned to expect at least revisiting the middle Keltner, and possibly lower.
· Subsequently, the NDX hit the lower Keltner channel and crossed below the 100D MA.
· Notice also that the NDX/VXN ratio (VXN is NDX VIX) exhibited a negative divergence at that spinning top, which was another bearish sign (see the lower panel); see also the early 2026 negative divergence in the NDX/VIX ratio.
· When NDX/VXN spikes above the upper Keltner channel, it usually quickly returns back inside the Keltner channel, visiting either the middle or the lower Keltner channel; A mirror image reaction happens when the NDX/VXN ratio spikes below the lower Keltner channel.
· The circles in the lower panel indicate spikes of the ratio below the lower Keltner; The first spike is usually followed by one or more additional spikes causing lower lows in NDX.
· Most often, NDX bounces within a day after these spikes, but bounces may not be significant; See red circles, which initiate bounces within downtrends, while green circles correspond to reversals and significant rebounds.
· The last spike (orange circle) suggests two things: 1) A bounce within 1-2 days, perhaps up to the middle Keltner, and 2) Likely another spike lower in the NDX/VXN ratio and possibly a lower low in price; Notice also that the Keltner is curling down.
· If the NDX does not bounce soon and keeps going down, it would be a bearish development; Other technical indicators indicate oversold conditions from which bounces start typically within 1-2 days.
· Given my explanation above, is the drop below the 100D MA a short-term bear trap?
· That would be a logical conclusion, and NDX may attempt to go back over the 100D MA toward the middle Keltner, or more.
· A failure to convincingly slice above the 100D MA would be a bearish sign.
· I also warned a couple of times in the last few weeks about extreme positioning in NDX futures, speculators long, Specialists short; see the Commitment of Traders Report Chart updated on 5 October in my X post below.
