NAS/QQQ Weekend Look (Jan 10-14)

Looking at the NAS/QQQs going into the week of Jan 10-14. Last week started out at the top of the broad sideways range and ended the week at the bottom. The range spans approximate from 15550 to 16650 and for the last 45 trading days price have moved from one side of the range to the other almost vertically. The sell off last week can be attributed to the Fed minutes pointing to a more hawkish Fed stance causing the 10 year yield to spike above 1.7% Looking back to 2000 the I can find no other time that the NAS as moved liked this so we are in uncharted territory as far as trying to predict what will happen next.

Going into next week all eyes will be watching for a break down from the range. The key level being 15492. If you scroll fintwit there is a lot of gloom and doom prognostications getting floated about. Some gurus already calling for a 20% decline in the indexes from here. Although the chart does look somewhat ominous I find it best to ignore all the predictions and focus on what actually plays out. If you look at the Russel 2000 you will see that price can trade in a range side ways for quite some time. The Russel has been stuck in a range for almost a year. With this in mind I will treat the bottom of the current range in the NAS as support until it is not.

If price bounces off the bottom of the range above 15492 watch for resistance above defined by the red box. Above the red box look for a test of the ATH. If prices breaks down below the range first support will be the bottom of the the neutral box. Second support will be the 1.618 fib inversion and then the Oct 4th pivot at 14367.75. A rebound in the Mega caps such as TSLA and AAPL is crucial for the indexes right now. Growth stocks continue to get beaten down and XLP is still showing relative strength. We will need to see some rotation from the XLP back into the XLK & XLY before the uptrend resumes.

Weekly Events


Wednesday... US CPI and Crude inventories
Thursday... US initial Jobless claims
Friday... US Retail Sales, US industrial production, Un.Michican Sentiment


Bull notes...

10 year yield is at resistance and may pull back
Potential softening of tone from Fed to quell fears
Earnings on horizon may provide catalyst
Sector rotation may support indexes.


Bear notes...

NAS now firmly below 55 SMA
10 year yield above 1.70%
Talk of accelerated Fed tapering
Potential Mega caps sell off
Covid new cycle worsens
Negative inflation data
Supply chain worsen with continued global shut downs and labor shortages

Comentarios:

Broke down out of the range easily. This is not a good look for the bulls. Price likely to drop to at least the bottom of the neutral. If the market gets irrational do not expect technical levels to work so be careful committing heavily in any direction.

Comentarios:

Lost the bottom of then neutral. Now at the last line of defense before a bigger drop. Very weak price action so far.

Comentarios:

The 1.13/1.272 zone held and price has pushed back to the breakdown level at 15492. This is where price is likely to meet resistance if the bears are in control. Watch for rejection in that area. Bulls want to see a red to green move here into the close.

Comentarios:

Early weakness. Bullish above 15492 and bearish below. Powell hearing on tap so likely no firm direction until that starts.

Comentarios:

Rejection off the red resistance zone and the 21 ema. Not a good news for the bulls. 15492 will likely be tested and the recent low is in play. Price action is telling me that the bounce was mostly short covering and many longs still want out. Levels often get retested so we will have to see if the lower levels can hold.