Nasdaq 100 Nears Cycle Low as Weakness Persists

technology

Nasdaq 100 Cycle

The “Cycle” in the Nasdaq 100 is nearing a bottom, which should lead to a completion of the current move in the short term. As price consolidates at the lower trend line, patience becomes paramount. In addition, initiating new positions at this juncture will not provide the highest probability outcome. Either NDX will break higher, completing the cycle low or it will lose this “subjective” trend line support level. Prudence dictates doing nothing until we have confirmation.

NDX Cycle

 

Big-cap technology stocks have taken a beating, despite current sales, earnings and directional guidance being optimistic for the next quarter. Indicators are oversold and extremes abound.

Nasdaq 100 60-Minute Chart

The 60 minute shows a hammer at the closing bell, which most likely reflects short covering and not a durable low. RSI is still dropping and price action remains below the declining 9/20ema. Err on the short side. Indications of a bounce are tepid at best.

NDX 60 technology

We continue to guide on the side of patience. In other words, take fewer trades and enter with a daytrade mindset to start. Stocks that close near the high of the day might be considered for a short-term swing.

The same goes for the S&P 500 and the Russell 2000. After hours blocks have been numerous, leading to higher prices in the morning that ultimately get sold. It appears institutions have been buying the low of the day after the closing bell and selling the high the day in the morning.

Until this pattern changes, as well as those mentioned above, we will take fewer trades and err on the side of caution.

Happy Wednesday,

Vinny



Volatility and the Week Ahead

Disclaimer:  Do your Own Research

Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise.

Investment Warnings

We would like to draw your attention to the following important investment warnings. The value of shares and investments and the income derived from them can go down as well as up; Investors may not get back the amount they invested – losing one’s shirt is a real risk; past performance is not a guide to future performance.

Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.