NQ's Distribution Phase 7/28/2020
This is the NQ at the 4 hour view.
The NQ's Key Reversal Day from July 13th is still intact. Is July 13th THE top? I don't know. I only worry about the next 1-5 trading days. I take it one day at a time.
The NQ is obviously now in the distribution phase of the market cycles. Robinhooders and newer traders got the alert to go long on tech or XLK. Guess who also gets those alerts? Institutions waiting to sell their tech and biotech shares.
The reason why it's distribution is because institutions or the big boys will sell tech and biotech shares. They will use their settled cash to buy up non-tech sectors which are currently undervalued right now. Also, non-tech sectors tend to give a better dividend than tech and biotech stocks.
This is very much a defensive move during a recession. Although, this may screw over the new traders, the cash sent to non-tech sectors is better for the economy overall. Let's look at this way. How many businesses can survive if their bank, shipping company, and factory closed down? Not many. Even tech companies need banks for investment capital and shipping companies to import semiconductors or computer parts.
Ever wonder why the Russell is still going on strong compared to the NQ in the last 2 weeks? It's because the Russell is mostly non-tech.
NQ probably has one more good bounce left and that's the pre-earnings hype from big tech. Other than that, I do not see the NQ significantly breaking out for the rest of the summer. The VXN is projected to break its wedge within the next two weeks. The VXN could break the wedge as early as this Thursday now that we are near the end of the wedge.
This is why you have to think beyond just tech. Tech trading was my third trade. However, I know that I limit myself if I don't think in multiple trades like commodities, equities, volatility, and cryptocurrency... the last one is still pretty new to me.
The NQ's Key Reversal Day from July 13th is still intact. Is July 13th THE top? I don't know. I only worry about the next 1-5 trading days. I take it one day at a time.
The NQ is obviously now in the distribution phase of the market cycles. Robinhooders and newer traders got the alert to go long on tech or XLK. Guess who also gets those alerts? Institutions waiting to sell their tech and biotech shares.
The reason why it's distribution is because institutions or the big boys will sell tech and biotech shares. They will use their settled cash to buy up non-tech sectors which are currently undervalued right now. Also, non-tech sectors tend to give a better dividend than tech and biotech stocks.
This is very much a defensive move during a recession. Although, this may screw over the new traders, the cash sent to non-tech sectors is better for the economy overall. Let's look at this way. How many businesses can survive if their bank, shipping company, and factory closed down? Not many. Even tech companies need banks for investment capital and shipping companies to import semiconductors or computer parts.
Ever wonder why the Russell is still going on strong compared to the NQ in the last 2 weeks? It's because the Russell is mostly non-tech.
NQ probably has one more good bounce left and that's the pre-earnings hype from big tech. Other than that, I do not see the NQ significantly breaking out for the rest of the summer. The VXN is projected to break its wedge within the next two weeks. The VXN could break the wedge as early as this Thursday now that we are near the end of the wedge.
This is why you have to think beyond just tech. Tech trading was my third trade. However, I know that I limit myself if I don't think in multiple trades like commodities, equities, volatility, and cryptocurrency... the last one is still pretty new to me.
Comment:
I forgot to ask. Is the NQ in a bull flag in June 29th or a bear flat since July 23rd?