As for the banks, they’ve led these markets higher for quite some
time, so when everyone started piling into the markets on the failed
reversal signal early last week, which continued into yesterday when the
NASDAQ took out another new intra-day high, the markets basically
started to unwind what was likely an overly crowded trade of sorts.
In other words, too many reckless bulls just started piling into the markets, and the markets love to make fools of those who pile into overly crowded trades.
So where could these markets be headed? When it’s all said and done, we still suspect much higher. That could start developing as soon as today, at any point over the next several days, or possibly even weeks, it’s still too soon to tell. It’s hard to know at this point, but one thing’s for sure – in the event they do continue lower, we think we’ve got a pretty good bead on where they may be headed.
Provided below is daily chart of the NASDAQ Composite, along with some key retracement levels dating back to that key election bottom and this week’s new intra-day high. As you can see, there’s two 3/8th’s retracement levels in green sitting at 5,719 and 5,666.
Those are both possible support levels. However, should these markets really start to pick up steam to the downside, it’s the 5,600 level we’ve pointed to here that should be the big line in the sand, a level worth getting back into the index ETF long trade, as well as a level to averaged down in some of your more quality names, and possibly add some new names.
We’re clearly not at any of those three levels now, or even close to them for that matter, which is why we’re just going to suggest sitting tight for the time being.
Should these markets find their footing without ever testing any of the above mentioned levels, and more importantly find new highs, then what happened yesterday will have meant nothing.
Conversely, should these markets simply continue lower, we’re clearly not going to want to step in the way until they’ve achieved what we believe to be a key technical bottom.
In other words, too many reckless bulls just started piling into the markets, and the markets love to make fools of those who pile into overly crowded trades.
So where could these markets be headed? When it’s all said and done, we still suspect much higher. That could start developing as soon as today, at any point over the next several days, or possibly even weeks, it’s still too soon to tell. It’s hard to know at this point, but one thing’s for sure – in the event they do continue lower, we think we’ve got a pretty good bead on where they may be headed.
Provided below is daily chart of the NASDAQ Composite, along with some key retracement levels dating back to that key election bottom and this week’s new intra-day high. As you can see, there’s two 3/8th’s retracement levels in green sitting at 5,719 and 5,666.
Those are both possible support levels. However, should these markets really start to pick up steam to the downside, it’s the 5,600 level we’ve pointed to here that should be the big line in the sand, a level worth getting back into the index ETF long trade, as well as a level to averaged down in some of your more quality names, and possibly add some new names.
We’re clearly not at any of those three levels now, or even close to them for that matter, which is why we’re just going to suggest sitting tight for the time being.
Should these markets find their footing without ever testing any of the above mentioned levels, and more importantly find new highs, then what happened yesterday will have meant nothing.
Conversely, should these markets simply continue lower, we’re clearly not going to want to step in the way until they’ve achieved what we believe to be a key technical bottom.
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