NQ: Is it GAME OVER?
Updated
Not yet! But, bulls only have 1 shot to turn this around while bears got an entire tide working for them. Every rally since Jan. 24 was halted as a result of news or news on top of news even as bulls try to shrug off the negativity. Started with Facebook that got the whole market tanking until Amazon gave some comfort but then NFP kicked in. Bulls tried to shrug off NFP but then CPI kicked in, bulls again were shrugging off CPI but James Bullard's comments kicked in followed by Russian news to wrap the week and these two were like the straw that broke the bull's back into the Friday session. This upcoming week is going to be just as newsworthy starting Monday and contrary to what everyone thinks about the FED's emergency meeting, I think if they provide better clarity on rate hikes (whether immediate or starting March), then that may give this market the visibility & stability that it needs especially if it's 25 basis points and not 50; but again who knows. In bull markets you buy the rumor and sell the news but in today's market, you sell the rumor and buy the news.
These are the signs every bull should be looking out for.
1. Double bottom. It appears more likely now that we will revisit the lows and it's crucial that bulls hold the fort otherwise we will be heading down to the 12900/13000 range without much support. NQ failed to break-out of its descending channel but a double-bottom that happens towards mid-channel and around the primary Jan. 4 downtrend TL could be the fuel that bulls need to form a long-term W pattern.
1hr price action on NDX. Though it does appear that we broke below the main downtrend into Friday's close, it's not yet conclusive.
2. Bullish divergence. Keep an eye on daily RSI as we approach the lows because a strong bounce from there will form a bullish divergence and a more robust technical case for bulls in the short to mid-term.
3. Volatility (VXN). Despite the fear and volatility rambling the markets, we actually haven't reached the September 2020 peak but rather stopped right at the Oct. 2020 highs. We did break-out of the downtrend in Q4 2021 which was the first warning sign for bulls, but resistances are being respected to a degree. We tend to see a 2nd spike after the main one that usually fades out, so will we see the same play-out once again? A rejection around 39-41 is what bulls wants to see if that spike carries on into next week.
4. Yields. US2Y and US10Y have been ripping but they are also over-extended and you can see it in the US10Y weekly close below. Bulls want to see yields cool-off, and I personally expect that they will. James Bullard added more fuel to their fire but I'm not sure they can carry on pumping at the same pace for much more. For the record, I don't think yields are the leading indicator for NQ movements.
NQ levels to watch for bounces or break-downs. Given the weekly candlestick close, chances are the first 2 levels atleast will be tested and breached.
- 14175
- 14058
- 13948
- 13860 (Strong support)
- 13706 (Very strong support)
Is the market ready to rip through the lows, put the index in bear territory and risk a 200 & 50 day EMA death cross in the near-term? I guess we shall soon find out.
These are the signs every bull should be looking out for.
1. Double bottom. It appears more likely now that we will revisit the lows and it's crucial that bulls hold the fort otherwise we will be heading down to the 12900/13000 range without much support. NQ failed to break-out of its descending channel but a double-bottom that happens towards mid-channel and around the primary Jan. 4 downtrend TL could be the fuel that bulls need to form a long-term W pattern.
1hr price action on NDX. Though it does appear that we broke below the main downtrend into Friday's close, it's not yet conclusive.
2. Bullish divergence. Keep an eye on daily RSI as we approach the lows because a strong bounce from there will form a bullish divergence and a more robust technical case for bulls in the short to mid-term.
3. Volatility (VXN). Despite the fear and volatility rambling the markets, we actually haven't reached the September 2020 peak but rather stopped right at the Oct. 2020 highs. We did break-out of the downtrend in Q4 2021 which was the first warning sign for bulls, but resistances are being respected to a degree. We tend to see a 2nd spike after the main one that usually fades out, so will we see the same play-out once again? A rejection around 39-41 is what bulls wants to see if that spike carries on into next week.
4. Yields. US2Y and US10Y have been ripping but they are also over-extended and you can see it in the US10Y weekly close below. Bulls want to see yields cool-off, and I personally expect that they will. James Bullard added more fuel to their fire but I'm not sure they can carry on pumping at the same pace for much more. For the record, I don't think yields are the leading indicator for NQ movements.
NQ levels to watch for bounces or break-downs. Given the weekly candlestick close, chances are the first 2 levels atleast will be tested and breached.
- 14175
- 14058
- 13948
- 13860 (Strong support)
- 13706 (Very strong support)
Is the market ready to rip through the lows, put the index in bear territory and risk a 200 & 50 day EMA death cross in the near-term? I guess we shall soon find out.
Note
Invalidated and we are likely in leg C of an ABC correction. I am however convinced that within the next 7-10 sessions a major low will be printed and it will hold throughout the end of the year. Weekly RSI will lead the way. 
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