Another day when a bellwether couldn't save the market. Apple (AAPL) couldn't do it last week and Amazon (AMZN) couldn't do it this week. Even Microsoft's (MSFT) earnings beat today didn't help.

You can see in the chart below that the NAZ was up nicely on Friday but couldn't hold on.


Distressing signs that are developing include the fact that MACD is sneaking negative. The 12-day EMA has moved below the 26-day EMA, a bearish signal if it continues. Williams %R shows the index falling out of an over-bought situation. Where it goes from here is, of course, the big question but it does seem to be skating on thin ice now.

I've been trying to examine the Alert HQ signals over the last couple of weeks and losing confidence in the ability of markets to make significant new highs without some kind of pullback happening first. It seems like tentative signs of that pullback are starting to show up.

Is the NASDAQ Now in Thin Air?

Readers of this blog may be familiar with one of our affiliates, MarketClub. They have created a new video entitled "Is the NASDAQ Now in Thin Air?"

Of the three major indexes they track, the DOW, the NASDAQ and the S&P 500, only the NASDAQ is in thin air.

What do they mean by thin air? So far the NASDAQ is the only index to make it past the 50% Fibonacci retracement levels as measured from the highs seen in 2007 and the lows that were made in March of this year. Fibonacci levels are something we only occasionally discuss on this blog so it is good to see this indicator explored in more detail in a real-life situation playing out this week.

Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level. Many professional traders - including Adam Hewison at MarketClub - are looking at the NASDAQ's Fibonacci retracement as it represents a potentially key turning point for this year's market.

While not all the pieces are in place to go short or get out of long positions, one of the first clues was put in place Wednesday by the Japanese candlestick charts. We can also see some divergences developing that need to be pointed out.