NAS/QQQ Weekend Look (Dec 6-10)
Here is the weekend look for Dec 6-10. Last week the NAS opened strong on Monday and bounced 339 points, but was met with strong selling at the red zone identified in my NAS updates last week. The selling continued the balance of the week with the index closing down 2%. The selling was vicious with most of the carnage hitting the small/mid cap growth names. The move can be blamed on a combination of negative factors which include the Fed retiring the word 'transitory' when talking about inflation, Omicron fears, weaker than expect job# and continued Fed tapering.
Going into this week last week's low and the 55sma will be key levels to watch. The NAS bounce late Friday off the 55sma, but it hard to tell if the bounce was actual buyers coming in or just short covering going into the weekend. If the market finds support at the 55sma look for price to hold above the neutral. Important to remember that price almost always retests a significant low at least on time before it makes a reversal. A continuation back to the highs will not happen until price breaks the resistance zone between 16000 and 16285. On the down side if price breaks last week's low and the 55sma the next level of support is the bottom of the neutral. Below that, if things get ugly, the green box and the Oct low would be in play.
A lot of traders are talking about the break of the H&S pattern. The implied move measured from the break of the H&S takes the NAS down to approximately 15000. Be mindful that during times of extreme volatility technical analysis become less effective due to high emotions. Expect exaggerated moves in either direction which make no sense. I will update as things play out. Please like my posts if you find them helpful.
Weekly events...
Tues...US international Trade
Wed... JOLTS & Oil inventories
Thur... Jobless claims
Friday... CPI data & University Mich sentiment
Bullish notes..
Support found at 55 sma
Price extended to downside
Santa Rally still possible
Powell softens tone to calm market
Bearish notes...
Vix +30
Spike in the 20y Treasuries (flight to safety)
Omicron worries
Taper tantrum continues
Valuation concerns
Mega caps under pressure
Emotional market participants trading commission free from their phones
Comment:
Price came back to retest the low as expected. For a sustained bounce here we want to see price break above the neutral and find a floor there. If it does there is potential for a nice bullish move. Fails to break look for another test of the low.
Comment:
Nice bounce out of the neutral zone and 55 sma. Now in the resistance zone at the downward trendline. Trendline and top of red box must be broken for trend to continue higher. Still a risk of a roll over. Above the red box the risk reduces.
Comment:
Broke the trendline and the top of the red box, which is positive. Has met resistance at the tan box. Would like to see price consolidate above the red box then break higher. Once above the tan box look for a return to ATH. If price falls back into the red box a retest of the trend line is likely. As I mentioned in the original post do not be surprised to see exaggerated moves in either direction.
