Trade Guideline for Thursday (NQ)

A consolidation "doji" day on Wednesday, a pause or a topping price action, heading towards the long weekend, as long as NQ can stay above key support 2020 the bullish bias is likely going to continue.

• Resistance are 2255 then 2280-2290.
• Below 2220, next support is 2200.

Trade Guideline For Wednesday (Nasdaq NQ)

The equity market tends to be bullish going into the long weekend, and it seems this week is no exception, bullish so far (next Monday is a labour day holiday and the market will be closed). Will it continue to be bullish into Friday only time will tell. But  the markets are approaching strong resistance area. For NQ strong resistance resides around 2270-2275.

For Wednesday key support for NQ is 2210-2220 area.

• Above 2210-2220 NQ should continue to rally towards resistance.
• Below 2210-2220 NQ is likely to drop down to 2180-2190 area.

Trade Guideline for Tuesday (NQ)

Monday was another bullish day with a close near the day high. For Tuesday the uptrend should continue as long as any pullback can stay above 2200.

• Above 2200, a potential upside target is 2260 area, a level where the second up-leg would equal the first up-leg on the daily chart.
• However, a sustained break below 2200 implies a potential tank down to 2170.

Trade Guideline For Monday (Nasdaq NQ)

Last Friday, with major central bankers meeting in Jackson Hole for the weekend it was to be expected that they were going to push the market up to make it looks like everything is fine. It is very easy for them to manipulate the market in the short run, but in the long run market forces rules.

It is very likely that they will continue to support the market this week as the banking problem in Europe is getting worse by the day. The sovereign and bank debt problem is not going away and in fact it is getting worse by the day. Central bankers are now stuck between the rock and a hard place, there is no way out, end game is very near.

Operation Twist, though has not been officially announced yet, is the latest tool the Fed trying out, a rerun of the 1961 Operation Twist (twisting the yield curve) has been launched, designed to push the European banks and countries from the brink of collapse. It should buy them some time, and delay the inevitable collapse, but it will make the eventual collapse even worse.

But regardless of what they will do come Monday I will use 2150 on NQ as key Line-in-the-Sand.

• Above 2150 short-covering should continue, with first resistance at 2175-2180, then 2200.
• Below 2150 the shorts can breathe easier, and NQ is likely to go down to supports at 2130, then 2120, 2100 and 2090.

Trade Guideline for Friday (NQ)

Another narrow-range consolidation day on Thursday with the close right near key support/resistance level. The Jackson Hole meeting of central bankers is going to dominate the news on Friday.

What the Fed is going to hint would be key for Friday and next week. many are expecting the Fed to either announce QE3 or OT2, without the announcement of either program the market may sell-off.

Key level on Thursday is 2110.

• Above implies more rally to first resistance 2130, then 2150-2160. Above 2160 intense short-covering can take price all the way to 2180-2200.
• Below 2110 the next support is 2100, 2080 then 2040.

Trade Guideline for Thursday (NQ)

Central bankers meeting in Jackson Hole this weekend will continue to dominate the news, and in the short-run the market may continue to be manipulated by the Fed.


Wednesday was a second up-day from the recent swing low. If Thursday is going to be a down-day the market is in crash mode.

On a daily chart, for the current correction we are either going to get:
(1) A lower high below August 17 high which implies a triangle pattern and is an indication of a very strong downtrend, or
(2) A higher-high above August 17 high, in which case we are going to get an ABC-wave pullback pattern, once completed the larger degree downtrend should resume.

• Lower-high target is 2173 - 2189 on NQ.
• Higher-High target is 2212 - 2264

Trade Guideline For Wednesday (Nasdaq NQ)

On Tuesday traders covered their shorts ahead of a potential QE3 announcement this weekend when world's major Central Bankers meet in Jackson Hole. 

With the Fed having been severely criticized for their QE1 and QE2 they may not be calling any new "money printing scheme" QE3, some analyst suggest the Fed may call it OT2 (operation Twist) but is is basically the samre thing.

If the Fed (Plunge Protection Team) has their way, short-covering should continue into the weekend, but only time will tell as can easily over-run their best effort.

Key support for short-covering to continue on Wednesday is 2090 - 2100.

• Above that target up is last week's swing high, either lower high or higher high.
• Below that NQ may test the consolidation cpoint of control 2060 - 2070. But if that does not hold, I will be looking for a test of last Friday's low.

Trade Guideline for Tuesday (NQ)

Monday was a consolidation day, but rumours that the Fed may announce QE3 by the end of the week ignites some after hours buying / short-covering. Whether it would continue into tomorrow only time will tell.

Key level for Tuesday is 2050, with key support at 2030 for NQ (1110 for ES) and resistance at 2060 NQ.

• Above 2060 short-covering has the potential to push price up to 2100.
• Below 2030 NQ (1110 ES) the market is likely going into liquidation mode.

European Credit Crunch To Intensify This Coming Week

With a major European bank specifically SoGen on the precipice of a total collapse just like Lehman Brothers in 2008, the stage is set for credits to freeze up in Europe anytime now. The impact should reverberate not only across Europe but around the world surely to cause major financial havoc that could severely crash the global market.

If so, Libor rates is certain to shoots up into the stratosphere which would decapitated the global financial system and cause a major global stock market crash more severe that the 2008 stock market crash.

The world central banks would likely intervene to supply liquidity but because they were so heavily criticized during the 2008-2209 financial crisis, they may be a little timid at first, which would be extremely bad for the global markets because once the system has collapsed it will be very difficult to support.

At the heart of the problem is a banking crisis, over-indebted and over-leveraged banks, problems they had in 2008 but was never solved because the world central banks, being run by Keynesian economists, never understood the problem, hence had prescribed the wrong medicine. Instead of solving the problem, they exacerbate the situation and had simply delayed the inevitable reckoning, the eventual bursting of the debt bubble.

Credit crunch will come, it is just a matter of when, In what form and how agressive the world Central Bankers would handle it this time around will tell us the trajectory of the incoming financial crisis that we can take advantage of and profit from. My guess is that the Fed would initially open up liquidity SWAP lines with major central banks in order to ease the credit crunch, but should that is deemed insufficient they will intervene by directly buying up the collapsing stocks. Governments in their misguided attempt would likely come in with "fiscal stimulus" but instead of helping the situation it that would greatly exacerbate the crisis.

 A timid response would be bad for the markets in the short-run but good in the long-run. The stock markets would crash and gold and silver prices should explodes further to the upside as "smart" global investors stampede into safe haven assets. Dumb money will pile into government bond of course, falsely thinking that bond is a safe haven.

I will be watching out for a major flash-crash that can easily sends dow 1000's of point down.

An aggressive response should slow down the collapse but could accelerate fiat currency collapse, causing the already accelerating gold price to go up even faster. Many investors will be running into government bonds, but although they will not lose their "fiat paper money", currency collapse would render their dollars or Euros worthless.

Trade Guideline for Friday (NQ)

Downtrend returned with a vengeance on Thursday as the flight out of fiat currencies and into the safety of gold resumed.

With several major European banks on the verge of total collapse the sell-off should intensify. However, it is very likely that the Plunge Protection Team will intervene to avert black Friday. Whether they are going to be successful or not is difficult to forecast, only time will tell. Should they fail the sell-off should continue Friday and to continue into next week.

Key support on the S&P 500 cash is 1120. Should that support go it can cause a liquidation sell-off across the board. For NQ, key support is 2040.

Trade Guideline for Thursday (NQ)

A down-day on Wednesday with the day low near support and the close at key inflection point. 

• For Thursday a sustained break below the close implies a likely decline down to 2140 - 2150 support zone. If that support zone does not hold, the next support is 2100.
• Above the close implies it is going higher to the next resistance zone 2150, 2160 then 2300.

Trade Guideline for Tuesday (NQ)

Short-covering rally continued on Monday. For Tuesday I would expect short-covering rally to continue above 2200, and also as long as we continue to get a higher low on pullback.

Resistances up are 2250, 2275 and 2300. Price may have to rally up to any of those level before the market can tank again.

Trade Guideline For Monday (Nasdaq NQ)

The market continued to consolidate, and Friday was the fourth consolidation days following two weeks of extremely intense sell-off. Once consolidation ends the sell-off should continue. When will that happen only time will tell.

Key Line-in-the-Sand for Monday is 2180.

• Above 2180 short-covering pullback up should continue, next resistance up is 2100, then 2250.
• Below 2180 is bearish implies a likely decline to first support zone 2140 - 2150, then 2100.

NQ needs a sustained break below 2080 to trigger a massive liquidation decline again.

Trade Guideline for Friday (NQ)

Thursday was another consolidation day, with NQ remaining inside a wide trading range 2050 to 2150 area.  with 2100 as key inflection point.

NQ needs a clear and sustained break below the lower trading range to get it to tank again. Until then, it may chop around inside the trading range.

Trade Guideline for Thursday (NQ)

A one day rally in a hard downtrend that is then followed by another large down day is an indication that this market is still in big trouble and is in crash mode. Global capital is fleeing risky assets such as stocks  and going into safe haven assets such as gold. As long as this trend continues the equity market will continue to be under intense selling pressure that could easily overwhelm the Plunge Protection Team.

It is possible that if price can stay above critical support level 2040 - 2060 area we can get another up day or another consolidation day. However a clear and sustained break below 2040 could send it crashing down to 1970 and even down to 1900 area.

Trade Guideline For Wednesday (Nasdaq NQ)

When the Fed did not yet announce a new money-printing program the market sold off hard. Plunge Protection Team has to come in and push the market up into the close. We may have a follow-through buying into tomorrow Wednesday.

Key Line-in-the-Sand for Wednesday will be 2145.

• Above 2145 there is a very good chance for a follow-through buying on Wednesday. Whether or not it can close positive only time and price action would tell.
• Below 2145 we may get a choppy consolidation trading range type of day or a bearish down-day. 

Trade Guideline for Tuesday (NQ)

With the US downgrade the stage was set for a crash. The only question was how successful the Plunge Protection Team was going to be. It seems the global credit contraction overwhelmed coordinated effort to support the market by G7. Market forces rule the day on Monday as the market tanked all day closing near the day low.

The sell-off should continue on Tuesday unless the Fed announces major money printing scheme (QE3) tomorrow (Tuesday).

Trade Guideline For Monday (Nasdaq NQ)

With the US debt downgraded by the S&P after the market closed on Friday, the stage is set for a volatile day on Monday and volatile week. The US Federal Reserve would surely come in to support the market come Monday if not already tonight Sunday night. Whether they are going to be successful in supporting the market and preventing it from crashing in an environment of quickly contracting global credit as a result of the downgrade only time will tell, come Monday.

Friday's low is key support for Monday. If that level is clearly broken to the downside we may get a crash unless the is a concerted intervention by G7 central banks. In a crash all bets are off as price can tank and tank.

Trade Guideline for Friday (NQ)

Employment report will be released before the market open on Friday. Perhaps Thursday's massive sell-off was in anticipation of bad employment report to be released tomorrow. NQ is nearing June swing low. It is likely NQ would break below June swing low before it can get a one to four days pullback up.

Lower low target and support for NQ is 2170. Is NQ going to consolidate above June swing low? or crash right through it? only time will tell, and that time is likely tomorrow Friday, by the open. A tank down to 2170 can bring in some profit-taking rally that can last one to four days.

Key level on the 5-minute chart is 2250. 

• Below 2250, the market is still in sell mode, next target down below Thursday low is June low, then  is 2170.
• Above 2250 implies a potential short-covering rally up to 2280 - 2300

Trade Guideline for Thursday (NQ)

Wednesday was a reversal bullish day, with capitulation decline in the morning that was quickly reversed to close in a positive territory at key resistance level.

For Thursday I will will use 2314 - 2316 as key resistance level and 2295 - 2297 area as key support.

• Above key resistance I will look for a rally up to 2330 then 2345 - 2360
• Below key support zone, I will look for a test of Wednesday low, then 2340, and if it is going to be a very bearish day I will look for a decline down to 2200. 

Trade Guideline For Wednesday (Nasdaq NQ)

Another large down-day on Tuesday breaking through strong support at 2300. Key resistance for Wednesday is 2300 and key support is 2285. 

The direction of the US dollar will determine whether we would have another large down-day or an up-day.

• Below 2285 I will be looking for another tank down to 2240 - 2250. 
• Above 2300, I will be looking for short-covering to take NQ up to 2340

Trade Guideline for Tuesday (NQ)

It looks like the plunge protection team was busy at work pushing the market up on Sunday night, causing a huge gap-up when the market opened on Monday.

However, the market was sold off immediately, tanking over 70 NQ points before the PPT came back in to buy which produce a huge afternoon rally which stopped right near 2355 resistance.

For Tuesday I will use 2355 as resistance, 2335 as support.

• Above 2355 target 2380-2385 resistance.
• Below 2335 target a test of Monday's low, higher low or lower low down to 2300.