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NDX - Potential Gap Fill? - Time to be VERY careful now

TVC:NDX   NASDAQ 100 Index
Markets are anything but boring, idiotic perhaps, but not boring that's for sure.

The Nasdaq is just shy of 7% from the prior ATH , despite the fact that the economy has still NOT reopened, many small businesses are in tatters, large business are hat in hand to the Fed and Treasury for bailouts AND north of 30 million Americans are unemployed.

Initial Claims:

So how do we play this market?

Carefully...very carefully...

The Nasdaq could very easily fall away from here, hitting it's head on the 78.6% fib retracement, mind you, this WOULD NOT invalidate the latest move higher, crazy as it may seem.

Should the Nasdaq fall away from here i would expect to see support show up at the 38.2% fib level, currently around the 8,200-8,400 mark, this would also coincide with a nice potential gap fill around the same area.

Nasdaq potential trajectory to the downside:

BUT, this is largely going to be dependent on how the 'cream' of the crop perform, namely the FAANG stocks ( FB , AMZN , AAPL , NFLX , GOOGL ).

Which recently have shrugged off any concerns about a potential global depression and have in fact make new ATHs.

FAANG stocks make new ATHs:

What to look for?

~Should we see TWO closes above the 78.6% fib retracement, then the odds are more skewed towards the bullish case for a gap fill at the 90 fib level or even a retest of prior highs.
~ If however we head lower, say two closes below the 9 ema , then i would begin to favor the bearish case to 8,200-8,400 more.

Lending credence to the bear case is the rather neutral/ bearish RSI reading at the moment is a good gauge of potential direction, which at press time is NOT confirming the latest moves higher.

In any case, I do firmly believe that the markets WILL head lower soon, BUT the fact that the 'obvious' path is down, leads me to believe that we may well be looking at one of the greatest bull trap in recent memory.


-TradingEdge

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