NAS/QQQ Weekend Levels (Oct3-7)

The Nasdaq traded down for yet another week. Finishing -3% for the week after trading in a 572 point range. Price in now sitting at the June 16th low to start the month of Oct. There is an h pattern in play which simply means price is has come back into key support setting up a potential reversal and short squeeze on any unforeseen positive news as traders are likely net short and positioned for a big drop. NINE 21 methodology does not confirm a break down until the 1.13 FibX is broken. A break below the 1.13 FibX however would be very bearish and likely lead to a panic sell off targeting the 2020 Peak. Below are some points I am considering.

• Price at June 16th low
• h pattern in play = short squeeze zone vs panic sell off
• Watch false breakdown zone for hard reversal
• RSI still above 20 = more downside potential
• VIX still below 36 = below max fear
• Break of 1.13 FibX negates bullish harmonic
• 2020 Peak in play below 1.13 FibX on panic selloff
• Early Oct still weak period for stocks
• Seasonal strength period begins Oct 9
• High bond yield & USD strength remain key data points
• Markets needs new information to rally.
• Non-Farm Payrolls wrap up week

WEEKLY EVENTS

Monday US ISM Manufacturing & Fed heads speak
Tuesday US Factory orders, US JOLTS, Fed Heads
Wednesday US International Trade, US ISM Services PMI & US EIA Crude
Thursday ECB Meeting Minutes & US Jobless Claims
Friday US Unemployment Rate & Non Farm Payrolls

NOTABLE EARNINGS

Monday Nothing Notable
Tuesday Nothing Notable
Wednesday HELE
Thursday STZ, LEVI, CAG
Friday TLRY

BULLISH NOTES

Oversold conditions
RSI at 29
At June 16th low support
Max bearish sentiment = Short covering rally possible
Potential dovish commentary from Fed heads + Powell
Potential positive reaction to economic Data
Still in bullish harmonic reversal zone
Potential new month inflows
Potential drop in USD & bond yields

BEARISH NOTES

Below HTF 382 Fib
Below 9/21/55 emas
Max bearishness = self fulfilling prophecy syndrome
Potential Hawkish commentary from Fed Heads + Powell
Potential negative reaction to economic data
Potential failure of June 16th low & 1.13 FibX = panic sell off
2020 Peak within striking distance
Historically strong period for Nasdaq doesn’t start till Oct 9th
USD at 20 year high & 10 year yield touched 4%

Comment:

Bouncing this morning off the open. Needs to get above the 1H trendline for continuation. Of note that big reversals almost always re-test the low before taking off.

Comment:

Broke the downward trendline yesterday and has continued higher overnight. Now above the 9 ema. Next big level is the key pivot (red arrow) and the 382 Fib. Above that we could see a move up to to the 55 ema. Watch for a sharp pull back at any time as all rallies have been sold into recently. 9 ema is now support.

Comment:

Closed at the 382 Fib and pivot resistance yesterday and has now pulled back towards the 9 ema. The the 9ema should provide support if the uptrend is going to continue. If it fails to the downside a 50% retracement of the recent up move is likely. Recent lows may still be re-tested.

Comment:

NQ continued higher after the initial selloff yesterday. Price broke through the 9 ema, but found support at the LTF 382 Fib. The move higher was stopped at the 21 ema around the HTF 382 Fib. The overnight high and low are the key levels to watch today. Upside target today would be the 55 ema if the 21 ema is broken. On a break of the overnight low look for a move down to the LTF 618 Fib.

Comment:

Market chopped sideways to down yesterday into NFP. The reaction has been negative to the data this morning. Move down to 618 Fib is now likely. Cash session is key. This move can be easily reversed when the market opens so caution prior is smart. On a break of the 618 Fib below the recent lows are in play. Conversely a reclaim of the 9em would be bullish.

Comment:

618 Target reached. A break below takes potentially back to the June 16th low.