Nasdaq 100 - The market is irrationally complacent

On 15th July 2022, we stated the market was positioning itself for a significant bear market rally in the short term. We said we were looking for a move up of magnitude between 5-10%. Then, a week later, we laid out conditions for the continuation of a rally while stressing our lack of belief concerning the sustainability of the bounce. We pointed out low liquidity in the market and a few companies dragging major indices higher. Additionally, we explained why fundamental reasons would later push markets over the edge and cause risk-off sentiment.

Then, finally, on 11th August 2022, we said the market reached its ultimate peak, and the rally was due to stop. We continue to stick to this assessment, and we would like to see more evidence to confirm our thesis. Ideally, we would like to see more decline in the price of QQQ accompanied by a spike in the volume. Additionally, we would like to see technical indicators complete their reversal from “bullish” to “bearish.”

Regarding our price targets, we stick to 300 USD for QQQ and 11 000 USD for NQ1!.

Illustration 1.01

The picture above shows the daily chart of Nasdaq 100 continuous futures. It also shows support levels made of fan lines. The yellow arrow indicates the bearish breakout below the first support level.

Technical analysis - daily time frame
RSI and Stochastic are bearish. MACD is due to perform a bearish crossover. DM+ and DM- are bullish. Overall, the daily time frame is bearish.

Technical analysis - weekly time frame
RSI and Stochastic show signs of exhaustion. MACD is bullish but in the bearish zone. DM+ and DM- remain bearish. Overall, the weekly time frame is bearish.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Trade closed: target reached