A gap-up above prior trading range high (2550) triggered short-covering rally on Wednesday. While ES trended up all day, squeezing the shorts and then closing near the high of the day, NQ consolidated and traded sideways in a narrow trading range above prior trading range and then closed in the middle of the range. The direction of Thursday's move will depends on where it trades in relation to its key level..
Key Level For NQ on Thursday is 2565, with Resistance at 2580-2585, Support at 2550.
- Above 2565 implies it is going to rally up to the next resistance zone 2580-2585.
- Below 2565 implies a re-test of 2550 support. A clear break below 2550 implies a decline to support 2530 then 2520.
- Potential liquidation decline on a sustained break below 2520.
Key Level For ES is 1325
- Bullish above 1325, with a target move up to break above prior swing high of 1332 area.
- Below 1325 implies it may want to re-test prior trading range high of 1318, which is now support.
A series of ratings downgrades from Moody’s last week has created an unwelcome but manageable liquidity squeeze on three major banks, by forcing them to post billions of dollars in additional collateral against derivatives exposures.
