On 5th January 2023, we noted that the breakout above the upper bound of the descending channel would be bullish for the Nasdaq 100 index in the short term. Quickly after that, NQ1! broke above the resistance and embarked on the longest winning streak since November 2021. This recent move-up has been accompanied by market euphoria and overly bullish calls. Many investors are already dismissing the prospect of recession in 2023 and thinking the bear market is over. However, these calls are likely to turn out to be premature. Therefore, we will pay close attention to earnings reports from various companies. We will seek a decline in corporate profits to confirm our bearish thesis (beyond the short term). In addition to that, we will look for downgrades in future outlook and warnings over the slowing economy. As a result, we expect reality to creep back into the market and drag it lower over time. Accordingly, we maintain our 2023 price target for NQ1! at $10 000.
Big names reporting their earnings this week:
Microsoft
J&J
Verizon
Lockheed MartinRaytheon Technologies
General Electrics
Tesla
AT&T
IBM
Boeing
General Dynamics
Illustration 1.01 Illustration 1.01 shows the daily chart of NQ1!. The yellow arrow indicates a bullish breakout above the resistance, followed by the longest winning streak since November 2021.
Technical analysis Daily time frame = Bullish Weekly time frame = Slightly bullish
Illustration 1.02 Illustration 1.02 shows the daily chart of NQ1! and two simple moving averages. We would like to see the index break below the 50-day SMA to support a bearish thesis. Contrarily, we would like to see the price hold above the 50-day SMA to support a bullish continuation of the rally.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active
⋅
Big names reporting their earnings today:
- Abbott Laboratories - AT&T - Boeing - General Dynamics Corp. - International Business Machines Corp. - Tesla
Trade active
⋅
Bearish retracement takes place.
Trade active
⋅
Yesterday, the Nasdaq 100 managed to erase most of its early losses and retrace back above the Support/Resistance. If it will break above the Resistance 1, it will further bolster the bullish case in the short-term. Today, we will pay close attention to the upcoming data on GDP, initial jobless claims, retail inventories, new home sales, etc.
Trade active
⋅
Today, we will pay very close attention to the FOMC.