Nasdaq finished the week down another 4% after a failed attempt to reclaim the 50 SMA. Price also failed to reclaim the ascending trendline and is below the 9/21 ema cloud. Key levels to watch this week will be the 50 sma (12570) above and the 618 Fib (12021) below. A break below the 618 Fib would be bearish and may lead to a re-test of the June low although there is also a higher time frame 382 Fib at 11766 which may provide support. Much of the price action will continue to be affected by inflation data and worries about what the Fed will do regarding interest rates. Worth noting that volume may increase as institutional investor should start returning from their summer vacations and we are starting a new month. Below are a few points I am considering going into this trading week.
• My bias going into this week remains Bearish • Nasdaq traded in a 640 pt range last week and finished down for the 3rd week in a row (-4.09%) • Price below 9/21/55 emas • Price below ascending trendline at the LTF 618 Fib • Increased odds of a re-test of the June 16th low (11068) if the LTF 618 Fib (12021) is broken. • Oil price spike on weekend due to OPEC output cut and Gazprom shutdown • Rejection off the 50 SMA and the ascending trendline was bearish • LTF 618 Fib is important support • Key events this week are PMI data, Canadian rate decision and Powell speaking • Sept is historically week period for the Nasdaq • Institutional investors will start returning from summer vacations • New month officially starts trading now the long weekend is over.
WEEKLY EVENTS
Monday US market closed Tuesday US ISM PMI Wednesday US Internationally trade, BOC Rate Decision Thursday ECB Rate Decision, US Jobless Claims & JPOW speaks + US EIA Crude inventories Friday Canadian umemployment rate, US Wholesale inventories & Fed’s Evans speaks
Oversold conditions PC ratio plus 1 so net long puts = potential reversal Potential drop in yields Potential positive news on Ukraine front Potential positive reaction to PMI & Powell comments Daily RSI moves back above 40 Potential new month inflows
BEARISH NOTES
Oil price spike over weekend Below 9/21/50 emas Below ascending trendline Potential break below LTF 618 Fib Potential negative reaction to PMI & Powell comments Hawkish Canadian rate decision Increased tensions in Ukraine Daily RSI drops below 38
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Here's a lower time frame look a the price action last week. It shows why I'm focusing on the trendline, 50 sma and the 618 fib.
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Flushed below the 618 and bounced out of the 1.13 Fib extension (false breakdown zone). If price can hold above the box it would be bullish. Trendline resistance above. May see some sideways chop with this scenario.
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View on the daily. Parked on the LTF 618. Note price is above the HTF 382 Fib which may act as a downside target if the 618 Fib does not hold. Market probably waiting on more Fed speak. Beige Book out at 2pm est.
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Positive reaction to Beige book. Broke down trend. The trendline/ 50 sma above is the target zone.
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Nice recovery from the initial sell off. Stretching into the 9ema here. Would expect a pause in this area. 50 SMA remains the higher target if the bullish move continues.
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Strong initial rejection off the 9 ema, but good recovery into the close. Bullish above the 9 ema now and bearish below. Upside target remains the 50 sma and ascending trendline.
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Broke the RTH last night and has pushed higher. Now at pivot resistance. Each pivot market with a red arrow should act as resistance. Good chance we fade back off the open. Of note... the continuous NQ contract I use in TV has rolled over and is out of sync with my trading platform so I am using NQU2022 instead today.
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Pushed through the pivots and at short term target. At the downward trendline/382 Fib and the 50 sma. Bullish price action as there has been buying pressure all morning.