Nasdaq - could breakdown.. but watch this level before shorting
Yes market looks like it'll breakdown, but it always does before it doesn't.
For the time being we have one trendline to work with (I prefer calling them demand lines because that's the logic behind the voodoo - it's where buyers historically step in and absorb supply, that simple). Economics 101: supply and demand curves. Demand for price increases with time, if demand for price falters, price breaks down and a new base is established (trendlines eventually get broken).
The rapid rise in rates is likely a major reason for the sell-off recently, so let's take a look at 10 year bonds:
Yesterday's action with key moving averages and thoughts:
Potential H&S developing:
Today's action:
Bottom line, if bonds stop collapsing we may see some relief in equities, especially in Q4. The concern I have is if bonds eventually do breakdown (as shown in the possible H&S developing) we may see that breakdown in stocks too, but a steeper decline (my best guess, maybe Q1 2022). At quick glance, I think it makes sense to prepare for higher yields going into 2022, but not expect yields to go parabolic in Q4. If this confuses you, google the relationship between rates and stocks, tech and growth in particular.
All this to say I have no idea what's going to happen and I'll just trade each asset level to level. GL
For the time being we have one trendline to work with (I prefer calling them demand lines because that's the logic behind the voodoo - it's where buyers historically step in and absorb supply, that simple). Economics 101: supply and demand curves. Demand for price increases with time, if demand for price falters, price breaks down and a new base is established (trendlines eventually get broken).
The rapid rise in rates is likely a major reason for the sell-off recently, so let's take a look at 10 year bonds:
Yesterday's action with key moving averages and thoughts:
Potential H&S developing:
Today's action:
Bottom line, if bonds stop collapsing we may see some relief in equities, especially in Q4. The concern I have is if bonds eventually do breakdown (as shown in the possible H&S developing) we may see that breakdown in stocks too, but a steeper decline (my best guess, maybe Q1 2022). At quick glance, I think it makes sense to prepare for higher yields going into 2022, but not expect yields to go parabolic in Q4. If this confuses you, google the relationship between rates and stocks, tech and growth in particular.
All this to say I have no idea what's going to happen and I'll just trade each asset level to level. GL
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The inflection point is likely near. My guess is we'll see a resolution by week's end
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We had the bullish resolution last week. Now look for some digestion and watch high RS leaders for buy or add spots. Targeting ~16k Nasdaq next
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Revisiting former highs. Needs consolidation here.
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