Nasdaq opened gap-down and liquidated in the morning on Tuesday, but then reversed and trend up in the afternoon, closing near the day high, a pullback day in a fast down-trending market.
A down-day on Wednesday is very bearish, implies the market is in a "crash" mode. What it will do on Wednesday will depend on where it trades in relation to its key level
Key level to watch on Wednesday is 2640.
- A sustained break above 2640 in the morning would imply a fast short-covering rally targeting 2670, likely a trending-up day with some profit-taking in the afternoon.
- However, failure to break above or a false breakout above 2640 would likely cause the market to pullback down to 2600. A sustained break below 2600 implies a re-test of Wednesday's swing low.
- A sustained break below Wednesday's low, particularly if occurring in the morning, would likely cause another large and fast liquidation decline.
The loss of the pro-banker political parties in both Greece and France in their recent election could trigger another round of credit crunch that has the potential to crash markets world-wide.
