Is NAS100 poised for a correction?
I mentioned in my recent SPX post that the tone going into this week is bearish following a choppy week of big tech earnings. Despite posting stellar earnings a slew of highly watched names either sold off or gave back gains post earnings. This was frustrating and surprising for many I'm sure. The reality is that market participants are in need of new market catalyst to take things higher. Solid earnings were expected and b/c the market is forward looking the question is whether or not everything is priced to perfection. The Fed remains accommodative, governments are stimulating like crazy and the economy is ready to take off as lockdowns ease. In other words the market has been given everything it ever wanted so the narrative is switching from things can only go higher to things can only go lower from here and this narrative is especially focused on the tech sector. So barring a new bullish catalyst the trend will likely be sideways to down and the eventual bullish catalyst may have to be cheaper prices. ie a significant pullback which would pull buyers back in.
All that said I have no plans to short this market. Price is holding above the longer term 236 Fib and my methodology tells me that the longer price stays above the 236 the greater the probability price pushes higher. The daily looks weak but the weekly and monthly charts look very bullish. Fridays was also the last trading day in April which can skew things as institutions lock up monthly gains and rebalance portfolios. If the price loses the 236, however, then I would have to reassess. If that happens the 382 below may then act as a magnet to the downside.
So going into this week my plan is to simply watch the short term range. Until price breaks the range, either higher or lower there is nothing to do but wait. Trying to trade within the range is not advised unless you are a good scalper. Even then its is very easy to get chopped up. A break above 14136 could yield a move to 14399 or higher. A break below 13616 could yield a move to 13347 for lower. One last thing to consider going forward is the fact the due to the large increase in new market participants, (many of whom are trading short term) expect exaggerated moves in either direction. Price is likely to push past key levels and then reverse sharply. Anticipating this can be help in controlling risk and getting better prices on stocks you want to own.
Happy trading.
All that said I have no plans to short this market. Price is holding above the longer term 236 Fib and my methodology tells me that the longer price stays above the 236 the greater the probability price pushes higher. The daily looks weak but the weekly and monthly charts look very bullish. Fridays was also the last trading day in April which can skew things as institutions lock up monthly gains and rebalance portfolios. If the price loses the 236, however, then I would have to reassess. If that happens the 382 below may then act as a magnet to the downside.
So going into this week my plan is to simply watch the short term range. Until price breaks the range, either higher or lower there is nothing to do but wait. Trying to trade within the range is not advised unless you are a good scalper. Even then its is very easy to get chopped up. A break above 14136 could yield a move to 14399 or higher. A break below 13616 could yield a move to 13347 for lower. One last thing to consider going forward is the fact the due to the large increase in new market participants, (many of whom are trading short term) expect exaggerated moves in either direction. Price is likely to push past key levels and then reverse sharply. Anticipating this can be help in controlling risk and getting better prices on stocks you want to own.
Happy trading.
Comment:
I was hoping price could hold the 236 fib but it did not happen. Yellen's comments regarding raising rates sent the market tumbling. Of course she has since walked back her remarks, but the damage is done. Price broke 13616 and ran all the way down to my target of 13347 before finally finding a floor. Many felt the close was bullish but it may have been just short covering. Algos are programed to exit trades in the last 15-30 minutes of the day. The only play for me now is a break above the high of todays candle or a break below the low of todays candle. Movement within the body of todays candle will be choppy. I won't start feeling bullish again until price gets back above the neutral (tan box).
Comment:
Working to break the top of the neutral. Above there I start looking for longs again as odd increase for a push back up to ATH. Until it clears that level, however, reversal back down still possible.