Today we saw perhaps one of the best days since the February correction in Nasdaq. Economic data looks "strong" (I have negative bias on economy health, so I'm using ""), and markets are up broadly. But, various signs show that today's action looks suspicious. Take NQ, for example. I marked out all recent NFP releases so you can see the market reaction. Notice how similar a situation we are in compared to the drop we had in March. Both times we are in a rising wedge, and close to breaking the lower trend line before the NFP data (In fact, if we look at yesterday's action, some of the sectors have already started breaking down, such as SOXX). What NFP does is to exhaust the last buyers out there, overshooting the RSI and the wedges of sector ETFs, so that when the price failed to shoot higher and the trend line of the rising wedge came up, that ignited the huge drop in March. This time, the only difference is that the next QT date would be the end of June, so the market may be more reluctant to go down. If I haven't entered the market, I would stay away from both short and long until convincing evidence occurred, by which I mean tops for short or apparent new trend lines for long.
Personally, my bias leans towards a downward visit to at least the black trend line in the coming week or two. One important reason apart from all those bearish wedge patterns, divergences we had on the chart is the volume. If we look at the daily time frame:
The OBV looks suspicious as it has lower highs while the market rallies. Looking forward to next week, any pullback with significant drop in OBV could signal a coming wave of sell-off.
Personally, my bias leans towards a downward visit to at least the black trend line in the coming week or two. One important reason apart from all those bearish wedge patterns, divergences we had on the chart is the volume. If we look at the daily time frame:
The OBV looks suspicious as it has lower highs while the market rallies. Looking forward to next week, any pullback with significant drop in OBV could signal a coming wave of sell-off.
코멘트:
Sorry about the screen shot. In the lower left corner, we already broke support on OBV, which turned into the end of the year sell-off, but then comes the new year pump.
코멘트:
Also, it's completely possible for market to go much higher before a sell signal actually occurs, such as the big new year rally on the left hand side of the screenshot, notice how although OBV did not acknowledge the trend, the market went march higher nevertheless.
코멘트:
Divergent high put in at the top of the wedge. Perhaps a good place to short.
코멘트:
NQ close to big trouble :p
코멘트:
All time high, but can it sustain it?
Bearish engulfing candle occurring on QQQ hourly, plus a doji on 15 minute.
Bearish engulfing candle occurring on QQQ hourly, plus a doji on 15 minute.
코멘트:
It turned out that that bull run was so strong that it went on for quite another while. However, this time, it seems that Nasdaq is inevitably breaking down. If the trendline breaks, expect a revisit to at least 7200.