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Nasdaq 100 index - NQ1! shows signs of weakness

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Despite the recent bounce in the price of NQ1! we remain bearish; indeed, we think the current price is attractive for the (re)entry of a short position. That is mainly due to the fact that fundamental factors which weigh on the U.S. economy did not change. Therefore, we still maintain our price target of 11 000 USD for the Nasdaq index.

Illustration 1.01

The Nasdaq's retracement toward the 50-day Simple Moving Average (SMA) indicates that the index is undergoing a strong correction. However, the price drop below the upper bound of the channel adds to the bearish odds; additionally, it invalidates the bullish breakout that took place recently.

Technical analysis - daily time frame
RSI is showing weakness; currently, it reverses to the downside, which is bearish. MACD is bullish. Stochastic is flattening. DM+ and DM- are neutral. The ADX is very low. Overall, the daily time frame is neutral.

Illustration 1.02

The picture above shows simple support and resistance levels for the Nasdaq 100 index.

Technical analysis - weekly time frame
RSI, Stochastic, MACD, DM+, DM- are all bearish. Overall, the weekly time frame remains bearish.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

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We remain beairsh in the medium/long-term; however, in the short-term we think the general stock market might be positioning itself for the significant bear market rally.

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Follow-up: We would be looking for a move between 5-10%. Although, we are very cautious. The market may fail to move higher as the FED meeting is not far away. It is even possible that the market will just stay choppy until then. Additionally, if the FED proceeds with 75bps rate hike, then it will greatly diminish chance of the move up in the short-term. However, after such a long period with the market going lower, it is just a matter of time when we will see a strong bear market rally.