NAS/QQQ Weekend Look (Dec 20-24)
Weekend look going into Dec 20-21. The Nas has been on quite the roller coaster ride of late. It started last week with a rejection off the 16450 level dropping down to 15750 only to bounce all the way back up following the FOMC meeting. Price then rejected one more time off the 16450 level and dropped back down to the weekly lows and the 55 SMA. The NAS is currently trading below the 55 SMA on Sunday night down 170 points. The reason for the drop is a confusing combination of Omicron, BBB disappointment and Fed worries.
Going into this shorted holiday week the NAS is threatening to break the Dec 3rd pivot low. Price has not been able to reclaim the top of the neutral zone so a test of the bottom of the neutral zone is likely. This area has confluence with an upward trend line and would complete a compound correction. If price cannot hold the 15244 level we are looking at a potential drop down to the Oct low.
I am leaning bearish given the price action. We have a topping formation, broken the 55sma and are now below the top of the neutral. That said, the technicals are starting to get sloppy with huge swings in both directions. This usually means indecision so I would not be surprise to see price trade sideways in a big range going into the end of the year. The NAS will need to find new leadership if the large caps continue to weaken for it to push higher again.
Weekly events...
Tuesday.. Biden Omicron speech
Wednesday... GDP & Existing Home Sales
Thursday... Jobless Claims, Personal income, New home sales.
Bull Notes...
Santa Rally still possible
Potential rotation back to small/mid growth
Omicrons fear are overstated
Bear Notes...
Manchin blocked BBB
Omicron restrictions & lockdown increase globally
Fed taper & rising rates
Mega caps roll over
Biden Speech spooks market
Memories of the 2018 Dec sell off linger
Comment:
May start trading in a side ways range defined by the big red box. The small box and the 55 SMA are current upside resistance. Bullish above the small box and bearish below but bound by the larger red box. Range bound price action can go on for a while so best not to commit heavily in either direction. We are currently in a low volume trading period.
Comment:
The NAS is still trading within the larger range, but can be traded on the lower time frames using my 7MESH system within the range . Here is a chart showing the areas I focus on when I trade the futures intraday using the neutral zone. I use all the levels I post in TV for trades my self. In this case I used the small red box which is the neutral of the range. I shorted into the bottom of the neutral. Went long on the break of the 55 sma. Went long again after the consolidation in the middle of the range knowing that price would likely target the top of the neutral. If price holds the top of the neutral I will go long to the top of the range (large red box).
