NDX swing low?

Updated

March 2021 swing low coincided with October 2020 resistance. Will January swing low coincide with Feb. 2021 resistance range? Next few days will be telling, watch out for 13720-13760 if we revisit again. It's still quite soon to call it but I cant imagine daily RSI's going down to 0 from here :)

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What a day! On Thursday I called for big reversal either Friday or today, and after the price action Friday and today at open, I thought indices were doomed until further notice only to turn a -5% red day in the green by close right around the Feb. resistance range I outlined.
Volume reversal candlesticks are usually accurate, let's see if it sticks and FOMC doesn't surprise. NQ needs to take out 14600/14820 and 15000 consecutively to start building bullish momentum; still heavy resistances ahead.

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Comment: Papa Powell showed up yesterday and well, markets obviously didn't like what he had to say. Some have asked me whether I believe the lows from Monday will stick and my answer is yes I think they will, but wouldn't be surprised if we revisit. Let me explain why.

This is a chart of the top 7 NAS100 heavyweights and a long-time Wallstreet darling (Apple+Microsoft+Amazon+FB+Tesla+NVIDIA+Google+Netflix). I've looked at all these individually and collectively, and to see a 25.4% cumulative average decline from highs to Monday's lows is substantial. Just for the record, in 2018 the same 8 stocks saw a 31% decline however the fundamentals were very different back then and puts them in a much stronger position today.

Apart from these heavy-weights, the pandemic induced other NAS high-flyers such as Shopify, Square, Zoom, PayPal, BABA, Twitter, DOCU and Peloton, all of which have been crucified and down anything from 40 to 85% already. To suggest that all these stocks still have major downside to go is pathetic and the argument that the heavyweights have gone up over 100% since the pandemic hence need to go down another 20% atleast from here is more pathetic because we need to factor in all the key differences today vs. January 2020, most notably liquidity and the fact that all big tech is doing extremely well in the current climate.

I will get into further technical analysis later today, assuming the levels I expect to hold will actually hold. There is so much noise happening now affecting the market and it's important to wait and monitor price action.

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It was another red day on NAS yesterday, mainly as a result of Tesla and semiconductors who were taken to the butcher. Tesla ended the day down -11.55%, NVIDIA -3.64%, Intel -7.04% and AMD -7.33%. The only positive outcome is that despite the bleeding, others like Apple, Microsoft, Amazon , FB and Netflix held up quite well and the index managed to close around the 14k mark. Now let's get technical:

1. Consolidation and Accumulation.
Whether you're looking at NDX, NQ or NAS100, you can see that despite bull weakness to the upside, the range from 13700 to 14k has been providing a good level of support all week long. Despite all the noise about FOMC, inflation, GDP, earnings, etc. this level has not been broken and I question what it takes to break lower (in the immediate term) if all the flashy news that resulted in this downtrend have already been factored in. Yes it is of concern that bulls failed at all resistances but holding the fort in a big downtrend may be the first sign of near-term recovery.

2. Selling Exhaustion
Bulls are shaken and worried, there isn't enough confidence in the bull case recently but this 3hr volume reading tells me capitulation happened on the very day I posted this idea; Jan. 24. Aggressive selling kicked in from Jan. 5 with solid follow-through, BTDipers got crushed in the following sessions, panic came to the surface on Jan. 21, everyone was throwing the towel by Jan. 24 and the final nail in the coffin was Jan. 26 (FOMC day). Selling is contagious, it takes time for the dust to settle but there are signs that it's already slowed down. The bigger red flag for bulls here is not how aggressive the selling is as much as its the absence of buyers, or atleast enough buyers at higher levels to push higher.

3. Oversold
We are nearly oversold on weekly timeframes, lowest since March 2020. We are excessively oversold on daily timeframes and on 4hr timeframes, there's already signs of bullish divergence (NQ).

All of this may be right and could be awfully wrong if we break lower. Today is Friday and price action during NY session will be decisive for next week. I personally believe that we must retest the 2 year bullish trend line we broke from and reverse big for the macro picture to change. Continuing to trend lower and lower are signs of complete breakdown (which could ultimately be the case) but I'm still not buying the argument of crash as of now.

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Great recovery on Friday, exactly from the lows I expected and broke out of short-term TL that I also expected and outlined above :) Once we break from 14600, expect 14820 and 15000.

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And another explosive session! NDX closes 3.29% up for the day at 14930. This is not a range to FOMO long if you're just about to join the party. Need to be cautious here as I expect some level of retracement and sideways action over the next two sessions. The reason why this 14900/15050 range is critical and why we're likely going to see some chop and battles to be won is because it happens to be around the 200 day EMA and SMA respectively; in addition to a bear TL connecting the Jan. 4 with Jan. 12 highs + 10 day EMA that acted as strong resistance which resulted in our last 1300pts freefall (10 day EMA is particularly anal during strong corrections). Will update levels in real-time based on price action around this level.

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35min into NY session and it went quite as I expected right from open. NQ 14710/14730 is first line of support for bullish continuation. Don't be fooled, some will see this 'cooling off' phase as a major rejection and get trapped into big shorts. The smart play was a short scalp until the next long, which could be due very soon.

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Beautiful close! Minor retracement exactly to the the support level I outlined above and then sideways action all day dancing around resistance until we broke out towards the end of the session. Alphabet earnings killed it as expected, and a stock split got it ripping in afterhours which also fueled NQ alongside AMD and NVIDIA to over 15100. The 10th of Jan. 15152 NQ low is right around the corner and we appear to be heading to 15236 which sits exactly at 50% retracement from Nov. highs to Jan. lows. NQ has big tests over these levels and can only be given a clear ATH signal post 15600 in my opinion.

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I said NQ shall be heading to 15236 (which we did in pre-market hours) and I also warned that it has big tests and challenges over that level, which is exactly what we saw as soon as we started to break down from there. Profit taking started an hour prior to NY open and continued into the session until the Google pump gap was filled. Bulls tried crawling back up to break over 15152 resistance but failed to recapture it all session until FB took a massive earnings crap after the close alongside the likes of Qual, SNAP and Spotify. Worrying sign to see a number of big names take 20-25% haircuts casually over the last few days, which was a big reason why the forces were pulling in 2 opposite directions today. Watch the below area closely tomorrow, it's a significant one for bulls if this rally has a chance to carry on. If 14820 doesnt hold, this TL back-test could be anywhere from 14630 to 14730 depending on what time we hit it, if we do.

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Morning folks. Mapping out the bullish scenarios on NQ for the day and the rest of the week, I see 3 levels and scenarios that could come into play here. First scenario assumes 14730 will hold, 2nd scenario assumes a TL retest during NY session that bounces then breaks out of yesterday's downtrend and last scenario is the line in the sand for me at 14500. Amazon's earnings will play a big role in either salvaging the situation or sinking the ship after the FB massacre.

The bear scenario assumes continuation of the downtrend after multiple failed attempts to breakout, which may ultimately mean breaking under the 14500 upper base we formed last week.

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Looks familiar? :) Dirty market play to liquidate stops under 14500 and close right at support ahead of Amazon earnings. What that told me is that the market was anticipating news to either push the range upwards to 14900/15000 in the short-term or tank it down to last week's low range. Of the 4 scenarios I personally believed this scenario had the higher probability ahead of NY open and after the first 2 hours of trading as soon as we rejected a breakout I gave it a 90% chance of materializing. Hope it helped you folks!

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Morning folks. NFP is definitely gonna lead the way today for upcoming market direction. We had a massive pile of news & earnings affecting the market over the last two weeks and today will mark a temporary halt to big news-driving events until next month. At this stage my guess is as good as yours because good news might be bad news for the markets and bad news might be good news for an aggressive FED to reconsider its approach.

I am cautiously more bullish biased for as long as 14500 holds and the downtrend breakout is confirmed in NY session. My targets for NQ leading up to early next week are 14820, 14875 then above that 14940 followed by 15152, 15236. Now 14682.

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We are in chop-zone until we're out of no-man's land. NQ is stuck in post FB stress disorder, unable to break upwards from that recent downtrend and not dropping with conviction even after Friday's news. I can see both the bull and bear signs as well as traps in both directions, but nothing can be confirmed until price action guides us and I reckon we will see the first hints of that tomorrow with confirmation on Wednesday (or so I hope).

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Today NQ battleground will be the 14365 to 14500 range. It's an opportunity for bears to break below, and probably one of the last chances for bulls to hold the fort otherwise revisiting the Jan. 24 lows is not far from reach.

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Morning folks. Another great trading day yesterday if you spotted the turnaround story during the first half hour of the NY session. As expected, bears tried to capitalize on pre-market trading and break below the 14500 range only for NQ support to hold strong and bounce big which helped break several resistances into the session and pre-market today. My first 3 targets for the week mentioned above (14820, 14875 and 14940) were all hit in pre-market :) NY session starts in 75 minutes and there's still alot of traps being setup in both directions, especially ahead of CPI tomorrow. One thing I like about this move is that last week we parked the bus at 14500 ahead of the NFP news and this week we seem to be going right up to resistance before it. I'll be looking for the below cues during the session.

- Price action around 14940/14965 resistance; are we making a move to close the NDX gap from Feb. 2 today itself?
- Whether or not the market will try to close the gap from yesterday and how we react from there. Recent gaps up from Europe didn't ultimately end well.
- Is Wallstreet buying or selling/hedging into close? Most importantly, will we be able to close over the 10 and 200 day EMA's?

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Hope you all made a killing today :) Without major CPI headlines that gap us down pre-market, these are the two bullish continuation scenarios I see playing out on NDX. Could be the last post I make on this idea, goodluck to all!

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CPI disappointed and the markets expectedly gapped down ahead of open. What next? I guess we have to wait for NY to find out keeping in mind the movement pre & post NFP numbers. Keep a close eye on the below NQ levels for signs of bounce or breakdown.
- 14800
- 14730
- 14640

bbourji

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