NDAQ Chart – July 8, 2009, premarket

I charted NASDAQ OMX Group Inc (NASDAQ:NDAQ) pre-market after NDAQ closed at 18.93 yesterday.

This is one of my favorite charts to follow using the Williams %R technical indicator and I’m kicking myself for not closing my July 20 naked puts earlier when I saw it turn.  It could turn out OK if I’m right about its chart.  NDAQ is using the previous resistance trend line of lower highs as a new line of support for lower lows.  NDAQ is still going down, but at a slower pace.  The real key I see in this chart is that NDAQ just hit the bottom edge of Williams %R oversold for both the 14 and 28 day indicators.  Check out the lines I drew for the past five times this has happened.  You can see that NDAQ rallied nicely from each of those points.  It’s not guaranteed to happen a sixth time in a row, but does present a picture that shows a good risk/reward opportunity in my opinion.  I’m not doubling down from my naked puts I already have in place yet, but might have to consider buying July 20 puts for a really short term trade.  With those trading at a bid/ask of 0.20/0.25 buying calls could be a lower dollar, high percentage trade to make.