NAS/QQQ Weekend Levels (July 5-8)
The Nasdaq has started to form a falling wedge pattern with price stuck just below the key structural level of 11700. This level has seen many touches over the previous weeks and I see it as a line the sand. I will be leaning bullish above 11700 and bearish below.. The market is oversold and due for another bounce but sentiment remains weak an many traders are expecting another leg lower. Here's a quick summary of the current environment.
• Current long term bias is BEARISH ==> Neutral
• PCE came out last Wednesday and was lower month over month hinting at peak inflation
• Yields have pulled back with 10 year yield below 3%
• Positive inflation news is offset with fears immerging about recession
• MU reported earnings and lowered guidance significantly pointing to slowing economy.
• Fed caught between need to raise rates, so they have more ammunition to fight a recession and creating a recession
• At extreme lows on all sentiment readings. Most market participants are sitting in cash or net short.
• Choppy price action last week going into the end of the month and the July 4th long weekend.
• Starting new month may bring inflows.
• Deeply oversold but many participants still expecting another leg down.
• Market vulnerable to another event shock as governments & Fed out of tools/money to react.
• Possible outlier events = invasion of Taiwan & complete oil cut off by Russia to Europe.
• 2020 peak may still be a magnet for price.
• More data on tap including FOMC minutes and Non Farm Payrolls
WEEKLY EVENTS
Monday US Market Closed
Tuesday US Factory Order & Durable goods
Wednesday US ISM Manufacturing, JOLTS & FOMC minutes
Thursday US International Trade, US Jobless Claims & EIA Crude
Friday Non Farm Payrolls & US Average Earnings
NOTABLE EARNINGS
Monday Market Closed
Tuesday N/A
Wednesday N/A
Thursday HELE, LEVI, PSMT, WDFC
Friday N/A
BULLISH NOTES
Oversold conditions
Extreme bearish sentiment = Contrarian indicator
Strong bear market rally always possible
XLY/XLP ratio showing slight divergence
Growth/Value ration showing slight divergence.
Bond yields have pulled back
BEARISH NOTES
High outlier event risk ie Taiwan invasion
Negative reaction to Fed minutes possible
Weak Manufacturing data possible
Increase in oil prices
Increased social unrest due to inflation
Bond yield pulling back suggest possible recession.
• Current long term bias is BEARISH ==> Neutral
• PCE came out last Wednesday and was lower month over month hinting at peak inflation
• Yields have pulled back with 10 year yield below 3%
• Positive inflation news is offset with fears immerging about recession
• MU reported earnings and lowered guidance significantly pointing to slowing economy.
• Fed caught between need to raise rates, so they have more ammunition to fight a recession and creating a recession
• At extreme lows on all sentiment readings. Most market participants are sitting in cash or net short.
• Choppy price action last week going into the end of the month and the July 4th long weekend.
• Starting new month may bring inflows.
• Deeply oversold but many participants still expecting another leg down.
• Market vulnerable to another event shock as governments & Fed out of tools/money to react.
• Possible outlier events = invasion of Taiwan & complete oil cut off by Russia to Europe.
• 2020 peak may still be a magnet for price.
• More data on tap including FOMC minutes and Non Farm Payrolls
WEEKLY EVENTS
Monday US Market Closed
Tuesday US Factory Order & Durable goods
Wednesday US ISM Manufacturing, JOLTS & FOMC minutes
Thursday US International Trade, US Jobless Claims & EIA Crude
Friday Non Farm Payrolls & US Average Earnings
NOTABLE EARNINGS
Monday Market Closed
Tuesday N/A
Wednesday N/A
Thursday HELE, LEVI, PSMT, WDFC
Friday N/A
BULLISH NOTES
Oversold conditions
Extreme bearish sentiment = Contrarian indicator
Strong bear market rally always possible
XLY/XLP ratio showing slight divergence
Growth/Value ration showing slight divergence.
Bond yields have pulled back
BEARISH NOTES
High outlier event risk ie Taiwan invasion
Negative reaction to Fed minutes possible
Weak Manufacturing data possible
Increase in oil prices
Increased social unrest due to inflation
Bond yield pulling back suggest possible recession.
Comment:
Watching 11670. The key structural level identified in the post. Needs to get above for bullish continuation.
Comment:
Meant **11690
Comment:
Broke the 11690 key level. Now the top of the wedge is resistance. Nasdaq is at a decision point going into FED minutes. Break through the top of the wedge or reject and fall back down...potentially to the bottom of it.
Comment:
Broke above the downward trendline yesterday which was bullish, but has met resistance at the Jun 27th pivot and is now pulling back. Bulls want to see the green box are hold. A move back below the green box would be bearish and the down trend may resume.
