Recall last week I wrote about the Nasdaq having a support band in the 2040 - 2070 area.  The support in that area produced a weak bounce on Thursday, due to the rigged GDP numbers.  That bounce was surprising due to the weak effort put forth by the bulls, which gives more weight to the argument that the whole psychological makeup of this market has changed.

In the daily chart of the Nasdaq below, I have once again plotted the Nasdaq with the 2040 - 2070 support area along with normalized volume, the Nasdaq momentum oscillator, and money flow index.  Notice how price is once again sitting in the band with no real effort to push higher.  This is the sign of a weak market as support is not providing a push higher, it is merely keeping prices from pushing lower for the time being.  

Now take a look at the Nasdaq oscillator (just below volume) which is constructed using advances and declines on the Nasdaq exchange.  I have drawn a dotted line to mark the lowest point of this indicator since the March low, which occurred at the low point of the June/July correction.  Just last week the oscillator broke that line and on Thursday just managed to jump up and tag it from underneath.  Money flow, which is based on price momentum and volume is showing he same sluggishness.  This is real weakness folks.  It says that 2040 probably will not hold.   

If that level gives way. where do we go next?  There is another Fibonacci support band in the 1748 - 1768 area.  First, however, there is a previous short term top at 1880 that should provide some support.  There is also an open gap in the 1800 area that could also be a target before price hits the next Fibonacci band.   The bottom line is that a more defensive posture is warranted here as tech is being sold.