Nasdaq’s NAMO indicator is now suggesting that the underlying index might continue selling off during the next several sessions.
As with any indicator, NAMO is not a perfect timing tool. The recent history shows that the NDX price sometimes ignores overbought conditions and continues to move higher (yellow box on the chart). However, there have been a number of instances during the last 12 months when the price retrieved after NAMO reached an extreme overbought condition (red boxes on the chart).
NAMO and NDX, 1d
If you consider the fact that both AAPL and AMZN have formed “obvious” bearish patterns on their respective daily charts, should NDX drops below critical 13000 support in the near future, big hedge funds might continue liquidating big tech positions adding ‘fire’ the market’s sell off.