In recent weeks, the Nasdaq has experienced a notable uptrend, largely propelled by positive earnings news from key companies within the index. This surge comes despite the Commitment of Traders (COT) showing only a slight and hesitant increase since the beginning of the year, hinting at market participants' growing interest in continuing this bullish trend.
Historically, the Nasdaq has shown a bearish seasonality across major time frames (5, 10, and 20 years), predicting a market bottom towards the end of the first week of March. Contrary to this statistical trend, the asset did not exhibit any signs of decline. Instead, it reached new historical highs, demonstrating significant relative strength compared to its historical records.
Risk indicators like the Value at Risk (VaR) and Downside Risk are currently indicating a reduced risk level compared to the annual averages of the indexes, suggesting a state of relative calm among investors. The VXN, the Nasdaq’s option volatility index akin to the S&P500's VIX, has been on a downtrend for months, recently stabilizing at the 17-point level, further signaling investor tranquility.
Volume indicators, including the Accumulation Distribution, On Balance Volume, and Price Volume Trend, all confirm the bullish trend without any divergences, suggesting that the current uptrend could continue into the future.
Despite these bullish signs, indicators like the SAFE HAVEN DEMAND and JUNK BOND DEMAND—reflecting the difference in 20-day stock and bond returns and the yield spread between junk bonds and investment-grade bonds—indicate a greed condition. This has pushed the sentiment fear and greed index into cautionary levels. However, overbought technical indicators do not currently signal an imminent correction, which would typically warrant caution.
From a price action perspective, the Nasdaq has been in a clear uptrend since the beginning of the year, consistently validating its support and resistance levels within an upward channel on the H4 timeframe.
Given these conditions, the strategy involves waiting for the price to reach the 18150 level, which represents a previous all-time high broken dramatically in recent sessions. If reached within the cyclical terms indicated by OmegaTools' Cycle Oscillator, this level should also coincide with the median line of the aforementioned channel, further acting as a support level for the price.
To optimize the trade, we should wait for price strength, rejecting closures below the indicated level, possibly using a more reactive indicator or observing the creation of bullish structures characterized by increasing highs and lows on lower timeframes.
This swing trading operation suggests a stop just above 18000 points, sheltering behind the last minimum internal structure. The take profit is more ambitious, aiming to ride the ongoing trend with a first partial target at historical highs around 18380 points, and a second, full closure target at the upper part of the mentioned channel when the price shows signs of weakness around 18600 points. This trade strategy boasts a reward-to-risk ratio of over 3.5, underlining the substantial potential for profit relative to the risk involved.
DISCLAIMER: This analysis is not financial advice. Investing in financial markets involves risks, including the potential loss of capital. Always conduct your own research and consider seeking advice from a financial advisor.
Historically, the Nasdaq has shown a bearish seasonality across major time frames (5, 10, and 20 years), predicting a market bottom towards the end of the first week of March. Contrary to this statistical trend, the asset did not exhibit any signs of decline. Instead, it reached new historical highs, demonstrating significant relative strength compared to its historical records.
Risk indicators like the Value at Risk (VaR) and Downside Risk are currently indicating a reduced risk level compared to the annual averages of the indexes, suggesting a state of relative calm among investors. The VXN, the Nasdaq’s option volatility index akin to the S&P500's VIX, has been on a downtrend for months, recently stabilizing at the 17-point level, further signaling investor tranquility.
Volume indicators, including the Accumulation Distribution, On Balance Volume, and Price Volume Trend, all confirm the bullish trend without any divergences, suggesting that the current uptrend could continue into the future.
Despite these bullish signs, indicators like the SAFE HAVEN DEMAND and JUNK BOND DEMAND—reflecting the difference in 20-day stock and bond returns and the yield spread between junk bonds and investment-grade bonds—indicate a greed condition. This has pushed the sentiment fear and greed index into cautionary levels. However, overbought technical indicators do not currently signal an imminent correction, which would typically warrant caution.
From a price action perspective, the Nasdaq has been in a clear uptrend since the beginning of the year, consistently validating its support and resistance levels within an upward channel on the H4 timeframe.
Given these conditions, the strategy involves waiting for the price to reach the 18150 level, which represents a previous all-time high broken dramatically in recent sessions. If reached within the cyclical terms indicated by OmegaTools' Cycle Oscillator, this level should also coincide with the median line of the aforementioned channel, further acting as a support level for the price.
To optimize the trade, we should wait for price strength, rejecting closures below the indicated level, possibly using a more reactive indicator or observing the creation of bullish structures characterized by increasing highs and lows on lower timeframes.
This swing trading operation suggests a stop just above 18000 points, sheltering behind the last minimum internal structure. The take profit is more ambitious, aiming to ride the ongoing trend with a first partial target at historical highs around 18380 points, and a second, full closure target at the upper part of the mentioned channel when the price shows signs of weakness around 18600 points. This trade strategy boasts a reward-to-risk ratio of over 3.5, underlining the substantial potential for profit relative to the risk involved.
DISCLAIMER: This analysis is not financial advice. Investing in financial markets involves risks, including the potential loss of capital. Always conduct your own research and consider seeking advice from a financial advisor.