Are we ready to finally bounce?
We are close but we need one more confirmation.
Hey Guys-
Nasdaq (NQ) and Tech Volatility have been off the charts for 15 straight sessions so I wanted to send some informal (and nuanced) thoughts to help out.
This short note will touch upon this week so far, and a near term outlook:
Monday: Nasdaq experienced a one-time frame down session. Start to finish. It started with a -200 Point Sunday Gap Down and ended Monday down -700. No mercy.
Tuesday: After surviving an overnight selloff of -300pts points, NASDAQ formed a weekly low (so far) at 19150. Tuesday was characterized as 2-Way trading where Bears conceded some ground to Bulls, with some sharp & brief but ultimately failed rallies throughout the session.
Wednesday: Nasdaq floats up in the overnight session with +200pts before CPI data is released. Data is released, and extend the gains to around +400 points (would represent a 50% retracement of Monday’s Selloff) before quickly reversing lower. After the opening bell, sellers had the power to close the gap where NQ erased its entire gain before floating back up to end the day. We can be sure today was a very difficult day for traders who caught up in the chop. Then, the index closes below the level when CPI was released. I characterize today as a small victory for Bulls.
To summarize, Monday was one-time frame bearish down with no discussion. Tuesday and Wednesday today were characterized by 2-Way volatile trading.
Taken together, Bears are beginning to loosen their grip of the market to Bulls, but upside is characterized by retesting higher levels without a tendency to stay there. To illustrate what the path for Upside looks like, it’s best represented by the bottom image.
Downside retracement of rallies, on the other hand, is clean, smooth, and almost frictionless.
So while we are making some progress and there are quite a number of conditions that could positive contribute towards forming a Swing Low for a few hundred points of tradable NQ upside, I do think it’s important to now recognize that politics play a much larger role in trading now than before. There are greater powers in the background that are influencing price action to fit the administration’s agenda.
To regain any confidence that we’re going to form a more sustainable bottom here, I’d like to see NQ make a Daily close back into last week’s range of 19750.
We can see that 19750 NQ (or 19950 NQ via June Contract) has been an incredibly stubborn area that Bulls failed to close over so yesterday and today.
I do expect Sell the Rip as a theme to begin to weaken a bit if we can re-enter last week’s range.
Lots of opportunity in this market once it finds its footing. We’ll discuss strategy on Whatsapp.
Stay positive! Better days are ahead!