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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.
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.
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.
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