Time for a pull back? - Long $ES vs short $NQ

Nasdaq100 has had an extreme overperformance relative to the broad market and all other sectors through many years. This trend may continue for the long run, but for now it has reached extremes and we have a few warning signals on the charts:

- We have seen a positive momentum divergence developing for weeks (reflecting in haDelta+, haOscillator and EWO )
- We may have a potential higher low
- Price is relatively far below long term equilibrium
- haDelta+ and haOscillator are both above their mid lines. If they reverse up, a reasonable pull back may take place.

- Ichimoku setup is back to neutral, price could attack a very thin Kumo. The breakout may take place at any time, to start a counter trend rally towards horizontal targets.
- There's a possible inverse H&S pattern. If confirmed, measured target of the move would be 5-9 % higher.

There is always something more behind technical analysis . I think most of market players have a heavy long positioning in NQ, or in FANGMAN stocks. Some may continue deleveraging and profit taking before elections, and others might have even more reason to cut the massive winners in case Biden wins.

We go long SPX ($ES futures ) vs $NQ, to target a 5-10 % relative value move.

Note: Special thanks to Nick Giva ( Twitter @NickGiva) for the call of this risk setup.


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