NAS/QQQ Weekend Look (May16-20)
The Nasdaq closed down for the 6th consecutive week dropping another 2.47%. At one point the Nasdaq had dropped almost 8 % from the previous week’s close when it made a low on Thursday dropping as low as 11689. The week closed on a positive note, however, rallying 435 points (3.65%) on Friday. The bottom on Thursday reversed almost exactly at the 1.618 fib extension after a deep flush below the Mar 5th low. The reversal zone was a confluence of the 1.618 extension, the long term 382 Fib retracement and expanding downward trendlines. The Nasdaq finish the week almost 6% off the weekly low and above the 382 Fib retracement, but below the 9/21 ema cloud and below the neutral zone.
Going into this week despite the positive close to the week my bias remains bearish. All rallies at this point must be considered corrections within the larger downward trend. My bias will remain bearish until price can reclaim the 9/21 ema cloud and the Neutral zone. My target for the current bounce was the 9ema which was almost attained on Friday. I will expect resistance at the 9ema if price continues to move higher. If price can break through the 9 ema the next upside target would be the 21 ema and the bottom of the Neutral box. If price resumes the downtrend , I will expect a retest of the recent low and perhaps a flush lower to the bottom expanding trendline. Below the expanding trendline the 2.24 Fib extension the 50% Fib retracement would be in play.
Now that the Feb meeting and CPI data are out of the way focus is likely to return to earnings, the war in Ukraine and the price action of the Mega Cap stocks. We have seen a sell off in all asset classes already. Growth, Small & Midcaps, Bonds, Crypto have all been hit hard. The final domino to fall would be Mega Caps. If they roll over further, I expect strong algorithmic selling across the board would take place given the weight that many of the names such as AAPL & TSLA have in the INDEXES/ETFs. Many ETFs are built from other ETFs and are rebalanced automatically depending on Market cap and price momentum. There is a big risk of a cascading effect if the Mega Caps sell off significantly. The good new is that this effect can work in both directions.
WEEKLY EVENTS
Monday Fed’s William Speaks & NY Fed Manufacturing
Tuesday US Retail Sales, Industrial Production & Fed’s Bullard Speaks
Wednesday US Housing Starts, Canadian PMI & US EIA Crude Inventories
Thursday ECB Minutes & US Jobless Claims
Friday Baker Hughs Rig Count
NOTABLE EARNINGS
Monday NIO, TTWO, SSYS
Tuesday HD, HUYA, JD, SE, WMT, WB, DOCS
Wednesday LOW, TGT, TJX, CSCO, BEKE
Thursday BJ, GOOS, KSS, LSPD, VIPS, AMAT, DECK, PANW
Friday DE, FL
BULLISH NOTES
Potential bullish momentum
Oversold conditions
Potential de-escalation in Ukraine
Further pull back in bond yields
USD Weakens
Mega Caps hold support
BEARISH NOTES
Hawkish talk from Fed Heads
Escalation of the war in Ukraine
Continuation of inflationary pressures
Bond yields continue higher
USD continues to strengthen
Continued Weakness in Mega Caps
Going into this week despite the positive close to the week my bias remains bearish. All rallies at this point must be considered corrections within the larger downward trend. My bias will remain bearish until price can reclaim the 9/21 ema cloud and the Neutral zone. My target for the current bounce was the 9ema which was almost attained on Friday. I will expect resistance at the 9ema if price continues to move higher. If price can break through the 9 ema the next upside target would be the 21 ema and the bottom of the Neutral box. If price resumes the downtrend , I will expect a retest of the recent low and perhaps a flush lower to the bottom expanding trendline. Below the expanding trendline the 2.24 Fib extension the 50% Fib retracement would be in play.
Now that the Feb meeting and CPI data are out of the way focus is likely to return to earnings, the war in Ukraine and the price action of the Mega Cap stocks. We have seen a sell off in all asset classes already. Growth, Small & Midcaps, Bonds, Crypto have all been hit hard. The final domino to fall would be Mega Caps. If they roll over further, I expect strong algorithmic selling across the board would take place given the weight that many of the names such as AAPL & TSLA have in the INDEXES/ETFs. Many ETFs are built from other ETFs and are rebalanced automatically depending on Market cap and price momentum. There is a big risk of a cascading effect if the Mega Caps sell off significantly. The good new is that this effect can work in both directions.
WEEKLY EVENTS
Monday Fed’s William Speaks & NY Fed Manufacturing
Tuesday US Retail Sales, Industrial Production & Fed’s Bullard Speaks
Wednesday US Housing Starts, Canadian PMI & US EIA Crude Inventories
Thursday ECB Minutes & US Jobless Claims
Friday Baker Hughs Rig Count
NOTABLE EARNINGS
Monday NIO, TTWO, SSYS
Tuesday HD, HUYA, JD, SE, WMT, WB, DOCS
Wednesday LOW, TGT, TJX, CSCO, BEKE
Thursday BJ, GOOS, KSS, LSPD, VIPS, AMAT, DECK, PANW
Friday DE, FL
BULLISH NOTES
Potential bullish momentum
Oversold conditions
Potential de-escalation in Ukraine
Further pull back in bond yields
USD Weakens
Mega Caps hold support
BEARISH NOTES
Hawkish talk from Fed Heads
Escalation of the war in Ukraine
Continuation of inflationary pressures
Bond yields continue higher
USD continues to strengthen
Continued Weakness in Mega Caps
Comment:
After a consolidation day yesterday price has broken through the 9 ema this morning on positive retail sale data and strong earnings from HD. Price can still reject but the start is positive. A break of the 11555 pivot improves odds of a move up to the 21 ema and the neutral box.
Comment:
Could not break through pivot resistance and fell back below the 9ema. Looking a the March 5th low for support. Below that back to the green box. May have choppy price action through the end of the week due to OPEX on Friday.
Comment:
Mar 5th low did not hold and the Mar 12th low was tested on Friday with price briefly dropping below but recovering to close the week. The Double Bottom is intact for now right at key support. The late move may have been short covering or an OPEX price pin to destroy PUT premium.
Comment:
Meant to type May 12th low not March 12 low above.
