NAS/QQQ Weekend Look (Nov29-Dec3)
Here is the weekend look for Nov 29-Dec3. After running making another ATH on Monday the NAS reversed sharply at the 1.618 fib extension identified last week. Price continued to fall the rest of the week finishing with a big down day on Friday. The move on Friday, due to covid news, was significant. Price broke the previous week's low on higher than average volume. The volume was notable especially given that Friday was a shortened trading day. Price now sits just below the 21 ema, but still above the longer term neutral.
Going into this week a lot will depend on how the NAS futures react. On one hand last week's close left a large red outside candle that cannot be ignored. On the other hand the move happened on day with low liquidity likely dominated by algos that may have over reacted to the covid headline. Most market watchers were in agreement that price was extended and breadth was weakening. This is how technicals often lead news events. Essentially the market was waiting for an excuse to sell. The question now is whether or not this event will play out as a short term flash crash or the beginning of deeper correction.
If the NAS sells off this evening I will be looking for support to hold at the green box near the top of the neutral zone. If price bounces quickly I will be watching the resistance zone(red box) for a rejection. A break above the red box would be bullish. A break below the top of the neutral would be bearish and would put a move down to the 55 SMA in play. A deeper correction could take the NAS to the bottom of the neutral. From a longer term perspective if price holds in and above the longer term neutral the up trend would remain intact. Below the longer term neutral things get a little more scary.
Weekly events...
Mon/Tues... Fed heads & Yellen speak
Wed... Manufacturing PMI & Crude inventories + OPEC
Thurs... Jobless claims
Friday... Non Farm Payrolls & Factory orders.
Bullish notes
10y yield dropped significantly
Strong seasonal period continues
Covid news may turn positive
Covid fears mean lower for longer
Bearish notes
Market still extended
High % of money still concentrated in a few names
Omicron is a serious variant
Buyers dry up as they expect lower prices.
Going into this week a lot will depend on how the NAS futures react. On one hand last week's close left a large red outside candle that cannot be ignored. On the other hand the move happened on day with low liquidity likely dominated by algos that may have over reacted to the covid headline. Most market watchers were in agreement that price was extended and breadth was weakening. This is how technicals often lead news events. Essentially the market was waiting for an excuse to sell. The question now is whether or not this event will play out as a short term flash crash or the beginning of deeper correction.
If the NAS sells off this evening I will be looking for support to hold at the green box near the top of the neutral zone. If price bounces quickly I will be watching the resistance zone(red box) for a rejection. A break above the red box would be bullish. A break below the top of the neutral would be bearish and would put a move down to the 55 SMA in play. A deeper correction could take the NAS to the bottom of the neutral. From a longer term perspective if price holds in and above the longer term neutral the up trend would remain intact. Below the longer term neutral things get a little more scary.
Weekly events...
Mon/Tues... Fed heads & Yellen speak
Wed... Manufacturing PMI & Crude inventories + OPEC
Thurs... Jobless claims
Friday... Non Farm Payrolls & Factory orders.
Bullish notes
10y yield dropped significantly
Strong seasonal period continues
Covid news may turn positive
Covid fears mean lower for longer
Bearish notes
Market still extended
High % of money still concentrated in a few names
Omicron is a serious variant
Buyers dry up as they expect lower prices.
Kommentera:
Sharp bounce up into the resistance zone. Minor pull back at the bottom of the red box now completing compound corrective move into the top of the box. Should meet heavier resistance in that area. Risk of a roll over move still high until price can base above the red box.
Kommentera:
Rejection at the top of the box. Now we have this look going on.
Kommentera:
Really interesting price action playing out right now. The neckline of the high timeframe head and shoulders was tested but held (see chart above). Now price in the after hours session is pushing higher and has built out a lower time frame inverse head and shoulders with neck line at the top of the red box. So a smaller bullish setup within larger bearish one. Best to stay neutral until a key level is broken.
Kommentera:
So the bears won by taking out the neckline of the larger bearish head and shoulders pattern. Price came down and closed right on the top of the neutral. The break of the neck line means that most traders will expect lower. Watch for a bounce up into the neckline(blue line) or red resistance zone and then a move lower. If todays low is taken out the downside targets would be the 55 sma and the bottom of the big neutral (tan box).. The measurement of the topping pattern takes it down to the bottom of the neutral. The bull party does not resume until price breaks back above the red box.
Kommentera:
The neckline of the H&S pattern is acting as resistance as price attempts move back up creating a bear flag above the longer term neutral. The bulls need to see price break through the bottom of the red box then break above it. Bears want to see the top of the neutral break to the downside. The green box is first support, below that then next level down would be the bottom of the big neutral.
