This market has been fucking around for a while now. The large consolidation between 5550 and 5650 has been frustrating to say the least, but the nice thing about these setups is the large potential energy they can signify. I don’t know if anyone remembers grade school science, but potential energy is literally anything that is in a position to turn into kinetic energy (the example always given in grade school books is a child at the top of a slide). We have now seen a breakdown from this consolidation that has been building up all this potential energy, coiling up which hopefully portends further September weakness.
I have no doubt that we are going to see a small bounce to retest under 5560, the lower end of this consolidation. I think we may even bounce a bit further initially, towards 5580. But I’m looking at this as a dead cat bounce. The market is still in “buy the dip” mentality. I doubt one red day is enough to have everyone running for the exits. No, that would take at least 2 red days. But I’m willing to accept the attempted bounce for good shorting opportunities for the rest of the week. I’m then looking for rejection to take us back towards the 200-day MA, which I assume would be between 5250 and 5300 when this gets there.
This index is now significantly weaker than the others. The weakness in tech has been prominent relative to other sectors since the peak run in July. This past run, however, has shown a serious deficiency in the bullishness of the previous market leaders. The Nasdaq made this picture-perfect resistance wall around 19,600 and began a rejection today. The strength of this wall is quite impressive and such a strong resistance level and rejection usually signifies a significant pullback if not, dare-I-say, a turnaround. Today seems the beginning move of a larger decrease, perhaps the first significant red month in perhaps a year. In summary, I’m looking for real pain to continue this month, just as with SPX and even at a more exaggerated pace than SPX.
I expect this to become the pride and joy of my trade journal yet (even more so than the drop in 2022). Today’s gap n go rally attempt was a technical play for a breakout about this 200-hour MA. Usually, this pattern is somewhat reliable for reversals, but in this case, I depended on my overall market thesis of weakness to come that this stock’s news today was just sucking in short term traders for a squeeze attempt which, thankfully, failed and the stock fell negative on the day. This failure to breakout even strengthens my thesis on this as this should really start to gain more momentum to the downside now. I’m still looking for this stock to lead the Nasdaq down in coming months.
This is ready to continue downward. This will be beneath $10, if not $5 by end of the year. This attempted a gap up today as well and came all the way back. Not sure what news drove it, but this bullish failure again should lead to seller’s getting the upper hand. Clearly sellers aren’t getting fooled by the fuckery attempts up here.
