Nasdaq 100 - Volatile moves characteristic of the bear market
Updated
Wild moves in the market left many traders perplexed over the past few days. However, we are not intrigued by the latest volatile movement. Indeed, we think the immense move up (especially in particular stock titles) perfectly displays the characteristic behavior of the bear market. Furthermore, market participants seem eager to buy any possible dip, which does not align with the capitulation and primary trend reversal.
That view is also supported by the fundamental factors poised to worsen in about a week. With the FED raising interest rates in the range between 50bps and 100bps, we have very little optimism over the medium and long term. In addition to that, plenty of evidence shows the beginning of a recession, which will be challenging to be averted.
As for the technical factors, these show a temporary relief. Nonetheless, we remain bearish on the Nasdaq 100 index and stick to our price targets for QQQ at 290 USD and 280 USD. Our price target for NQ1! stands at 11 000 USD.
Illustration 1.01
Illustration 1.01 shows the Nasdaq continuous futures on the daily chart and within the descending channel. Additionally, two simple moving averages are displayed, 20-day SMA and 50-day SMA. We will pay close attention to these moving averages as we want to see a bearish crossover between them (which will confirm our bearish thoughts). However, if the breakout to the upside (above the upper bound) takes place, the odds will increase toward a bullish side (for the short-term).
Technical analysis - daily time frame
RSI is bullish. Stochastic is slightly bullish. MACD is neutral; however, it will be bullish if it breaks above 0 points. DM+ and DM- are bearish; if they undergo bullish crossover, it will bolster the bullish odds. Overall, the daily time frame is bullish, although the trend is weak, pointing to choppy price action.
Illustration 1.02
The picture above shows the daily chart of NQ1!. The price can be seen increasing over the past few trading sessions. Simultaneously, the volume can be seen decreasing. That is not an ideal picture for the bullish thesis; therefore, we will pay close attention to the following price action. Ideally, we would like to see an increase in volume accompanied by a price decline.
Technical analysis - weekly time frame
Stochastic and RSI are bearish. MACD points to the upside; however, it remains in the bearish zone. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
Illustration 1.03 portrays the daily chart of NQ1!. The yellow dashed line shows the immediate support/resistance. The breakout above it will be bullish; the breakout below it will be bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
That view is also supported by the fundamental factors poised to worsen in about a week. With the FED raising interest rates in the range between 50bps and 100bps, we have very little optimism over the medium and long term. In addition to that, plenty of evidence shows the beginning of a recession, which will be challenging to be averted.
As for the technical factors, these show a temporary relief. Nonetheless, we remain bearish on the Nasdaq 100 index and stick to our price targets for QQQ at 290 USD and 280 USD. Our price target for NQ1! stands at 11 000 USD.
Illustration 1.01
Illustration 1.01 shows the Nasdaq continuous futures on the daily chart and within the descending channel. Additionally, two simple moving averages are displayed, 20-day SMA and 50-day SMA. We will pay close attention to these moving averages as we want to see a bearish crossover between them (which will confirm our bearish thoughts). However, if the breakout to the upside (above the upper bound) takes place, the odds will increase toward a bullish side (for the short-term).
Technical analysis - daily time frame
RSI is bullish. Stochastic is slightly bullish. MACD is neutral; however, it will be bullish if it breaks above 0 points. DM+ and DM- are bearish; if they undergo bullish crossover, it will bolster the bullish odds. Overall, the daily time frame is bullish, although the trend is weak, pointing to choppy price action.
Illustration 1.02
The picture above shows the daily chart of NQ1!. The price can be seen increasing over the past few trading sessions. Simultaneously, the volume can be seen decreasing. That is not an ideal picture for the bullish thesis; therefore, we will pay close attention to the following price action. Ideally, we would like to see an increase in volume accompanied by a price decline.
Technical analysis - weekly time frame
Stochastic and RSI are bearish. MACD points to the upside; however, it remains in the bearish zone. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
Illustration 1.03 portrays the daily chart of NQ1!. The yellow dashed line shows the immediate support/resistance. The breakout above it will be bullish; the breakout below it will be bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active
The breakout above the resistance took place, bolstering the bullish odds. To invalidate the breakout, the price has to return below the resistance (now acting as a support).Trade closed: target reached
Our price target of 290 USD was reached.
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