 Hello traders at CMC markets. Welcome to another update by RRG Research for Thursday 1st of June and I'm recording this here in London. My name is Trevor Neal and welcome to this TA Extra Report. This morning we're going to focus on the NASDAQ and the Dow Jones in industrial average. Now from this relative rotation graph here with daily sampling you'll see why that is. We've got here major global indices and we can see that the US indices are very disperse. We've got here right up here we've got the NASDAQ along with the Nikai. We've got the S&P close to the crosshair here so moving with the benchmark which is the MSCI world we've got the Russell here a little bit to the right of 100 and then we've got the Dow over here and in the actually in the lagging quadrant and really stuck in in their short tail not really moving but the NASDAQ has got a long tail and is moving very very strongly. So a very disperse picture we've got the technology stocks in in particular two of the technology stocks NVIDIA and META absolutely leading the pack they're all relatively strong but those two are really really generating the strong outperformance in the NASDAQ itself but the industrial average is lagging behind it's the weakest of all the US security so let's have a look at those two indices and see what the chart is because after all the NASDAQ may offer some potentials in form of a catch up but let's see if that's really the case starting with the Dow Jones industrial average and a daily chart will go short of term in a moment first the week let's look at the relative rotation graphs lines the ratio and the momentum both of them below 100 in here slight improvement but it's really still looking very very poor that's what we saw in the RIG graph in we see a significant area of resistance at 34,300 high high high high high they're very stubbornly holding the market containing the market and making it this is a very poor performance we're in a intermediate term downtrend and the support is at this low here at 31,300 let's jump now from the weekly chart to a short term chart now there's a daily chart of the Dow Jones industrial average the as you can see significant tops in here high high high high high high high these are all pretty close together at 34,000 to 13,000 34,300 we're in an intermediate downtrend now we have seen already that the RIG lines both the momentum and the ratio are below 100 so relatively poor performance against the MSCI world this downtrend channel here now lower highs lower lows in place there is support down at 31,400 approximately but the move here is is downwards and there's a lot of resistance above really this whole area up in here is resistant and we're moving below it now so that the weak situation in and as in the Dow Jones industrial average is looks like continuing there's a tech 100 index it's been soaring since January we picked that up in in RIG back right back at the beginning of the year broke the downtrend line powered ahead pulled pulled back powered ahead retested the August 2022 highs eventually broke it and then had to pull back soared ahead and then now we've got this the situation in this perspective with daily charts is that the RIG lines both above 100 looking good the RSI two tops in place here but a strong uptrend is behind it but it's a little bit of hesitation from the slower reacting MACD we've got a gap widening in the difference between the MACD and the signal line so increasing momentum from that perspective but let's zoom in on this area here now is there an opportunity in here or are we topping out now this is a NASDAQ with each bar being an hourly bar so we have got the part of the big surge up we have topped out at 14,520 then we've come down with set of lower highs here not perfectly drawn I've got to say but there is a perfect we are easing back I put in Fibonacci retracement in here the point being that we have not yet reached 38.2 so if it were to stabilise here or above then that's a very has very strong implications for the next leg looking like being as long as that leg upwards if we stabilise here if we stabilise lower then we have to be more conservative in in our projections if it comes back to 61.8 almost two thirds that's a lot of selling coming into the market that is bullish and so we must be respectful that the trend may be slowing up ending even so at the moment it could be just another opportunity like that or it could of course be the top which is it look most likely to be well the MACD as you would expect is pointing down so at the moment we're easing back the RSI also lower highs in place here it's actually the value of the RSI is at 44 so it's neutral at this moment so it's gone from bear bear you know downtrend in the RSI to a neutral reading holding up so it's too early to say that it's a it's a buy I think the aggressive traders the short-term traders would look very very leased for the downtrend line which is approximately at 14,300 just about 14,300 to be broken to say there's a resumption of the trend then the protection is a very obvious place would be the recent low of 14,210 that's a there if that were to happen so if we were to steady up today then the implications will be for another very strong move because the pullback has been so weak however we could drive lower but I would use the same strategy as we are still in the intermediate term in a strong uptrend so we still treating this as a reaction rather than a reversal and if it were to drive lower still below this downtrend line I'd use the downtrend line as a signal of a reversal back in the direction of the trend the low that proceeds it as in this case here but it could be lower as time goes on then that would be a good protection level but further we go down then the more modest the likely next move would be so I think the strategy is to approach it from the bull side use you still use this as an opportunity it still looks most likely as an opportunity and not a top in the market not the end of the move and so we're structuring the trade as a good risk-reward ratio and the quicker it happens it reverses upwards the better the opportunity will be another opportunity would be to do a pairs trade between the NASDAQ and the Dow Jones the Dow Jones is weak and looks like getting weaker it's like it's detached completely and the NASDAQ looks like a good place potentially to enter the market even though it's been going up since January I will leave it there for this session and thank you very very much for listening it's from me Trevor Neill at ROG Research I look forward to talking to you again and may the trend be with you