The markets continued to work their way lower yesterday following
Monday’s sharp reversal back to the downside.
We previously the NASDAQ
Composite was starting to trade on somewhat shaky ground. It just
decided to take out both sides of the equation before it fell apart this
week. However, the NASDAQ did find its way down around 6,150, so it is
now in a position to potentially re-rally.
Whether or not it can find follow through on the relief though is the bigger question.
So now what? If the index can’t find its footing here, we’re pretty convinced the 5,900 level is inevitable.
It doesn’t mean the markets won’t find some relief along the way, but at this point the gap you see in this daily chart here not only represents a move back to a previously key consolidation area, it’s also likely going to be right around the 3X3 DMA (blue line) once it gets there on the monthly chart below, which currently sits at just under 5,800.
For those of you familiar with DMA’s, you know they move – just like simply moving averages, so if the NASDAQ starts to work its way lower, by the time it fills the gap in that daily chart above the 3X3 DMA should be somewhere right around that 5,900 level or slightly below it.
That’s downside the target now, unless these markets can literally start moving higher today. It’s clearly possible as we’ve seen these markets saved at that very last technical minute so many times before, but last Friday’s multi-year record volume day coupled with Monday’s meltdown is enough cause for concern in the interim.
The bottom line is this selloff was way overdue. You can also see in the monthly chart above the index hadn’t had a bad month ever since it broke out of ifs 2015-2016 volatile consolidation range, so an orderly move back to its 3X3 DMA (blue line) would be very orderly. It may not feel like it, but the reality is nothing ever goes up in a straight line forever.
The good news is we’ve continued to tread lightly lately, and this week proves why. None of our open ideas got hurt too bad, while so much of the tech space – and almost every other sector for that matter – got hit pretty good.
Whether or not it can find follow through on the relief though is the bigger question.
So now what? If the index can’t find its footing here, we’re pretty convinced the 5,900 level is inevitable.
It doesn’t mean the markets won’t find some relief along the way, but at this point the gap you see in this daily chart here not only represents a move back to a previously key consolidation area, it’s also likely going to be right around the 3X3 DMA (blue line) once it gets there on the monthly chart below, which currently sits at just under 5,800.
For those of you familiar with DMA’s, you know they move – just like simply moving averages, so if the NASDAQ starts to work its way lower, by the time it fills the gap in that daily chart above the 3X3 DMA should be somewhere right around that 5,900 level or slightly below it.
That’s downside the target now, unless these markets can literally start moving higher today. It’s clearly possible as we’ve seen these markets saved at that very last technical minute so many times before, but last Friday’s multi-year record volume day coupled with Monday’s meltdown is enough cause for concern in the interim.
The bottom line is this selloff was way overdue. You can also see in the monthly chart above the index hadn’t had a bad month ever since it broke out of ifs 2015-2016 volatile consolidation range, so an orderly move back to its 3X3 DMA (blue line) would be very orderly. It may not feel like it, but the reality is nothing ever goes up in a straight line forever.
The good news is we’ve continued to tread lightly lately, and this week proves why. None of our open ideas got hurt too bad, while so much of the tech space – and almost every other sector for that matter – got hit pretty good.
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