Trade Guideline For Friday

On Thursday Nasdaq continued to chop sideways, and may continue to do so on Friday. However at the end of the day on Thursday NQ looks ready to sell-off.

Key Level For Friday is 2730.

-- Bearish below 2730, but there are several layers of supports just below, first support is 2720 then 2705.

-- Bullish above 2730 with resistance at 2755.

U.S. GDP Contracts for First Time Since 2009

The U.S. economy unexpectedly contracted in the fourth quarter, suffering its first decline since the 2007-09 recession as businesses scaled back on restocking and government spending plunged.

Gross domestic product fell at a 0.1 percent annual rate after growing at a 3.1 percent clip in the third quarter, the Commerce Department said on Wednesday.

That was the worst performance since the second quarter of 2009, when the recession ended, and showed the economy entering the new year with no momentum.

The contraction, coming against a backdrop of tightening fiscal policy, could spur fears of a new recession and create an urgency for policymakers to deal with outstanding budget issues.

Trade Guideline For Thursday

More sideways consolidations on Wednesday. For Thursday, expect more of the same unless it can breakout out of the current trading range between 2700 support and 2775 resistance. Because NQ has been  inside the range for a while breakout may be coming soon.

Trade Guideline For Wednesday

On Tuesday Nasdaq opened and ran down to support in the morning before rallying back up and closed just below resistance. 

For Wednesday it would need to break above resistance 2745 to trigger a fast short-covering rally, next resistance is 2765, and also R1 - Breakout Level.

Staying below resistance implies it is going back down to support, 2730, 2720.

US Debt Ceiling Lifted

Trade Guideline For Tuesday

Nasdaq continued to trade sideways inside a narrow trading range on Monday unable to break above resistance, a possible topping price action. 

On Monday the US House of Representative voted to suspend the debt ceiling, opening the door for massive unrestricted money-printing and the beginning of the end of the US dollar. How it affect the equity market in the short-run depends on whether or not the suspension has been factored in to the market. If so, the market may have topped and it should then start to reverse back down. If not, we should see more rally in the short-run.

Key Support For Tuesday is 2730.

-- Still bullish above 2730 with target between R1 and Breakout Level.

-- Bearish below 2730 with supports and targets at 2720 then 2705.

House Votes to Suspend U.S. Debt Ceiling

Trade Guideline For Monday

Sideways consolidation pattern for NQ on Friday. Inflection point for Monday is 2740.

-- Above 2740 implies it is going to rally up with resistance at 2750, and 2764.

-- Below 2740 implies a re-test of Thursday swing low, 2714 and 2705.

Record High Risk Appetite

Drip…drip…drip… day by day, stocks leak higher, gradually inching up to record nominal highs; credit yields compress to record lows (and spreads near record pre-crisis tights); and volatility compresses (realized and implied) to near all-time-record lows. 

We have discussed the positioning of the market (S&P 500 futures at their net longest since 2007), 

crowded nature (JPY Shorts and NKY Longs), and 

sentiment (AAII Bulls near record highs). 

But, it is Credit Suisse indicator of risk appetite that should be worrisome for most investors. With Credit Risk Appetite well beyond any previous record high and Global Risk Appetite at its highest since 2006, perhaps it is time to consider the hedging discussion we had yesterday? With the euphoria dramatically dislocated from fundamentals and empirical world wealth trough-to-peak moves indicating a turning point, the lack of bearish arguments is deafening.

Trade Guideline For Friday

Nasdaq was being dragged down by a large decline in the share price of Apple computer which ended down over $63 per share. The 5-min and the 60-min trend in NQ is currently down with its daily chart forming a bearish head & Shoulder pattern. Unless it can rally and make a new high above September 2012 swing high the bearish H&S pattern will remain intact.

Key Level For Friday is 2720.

-- Above 2720 implies it is going to rally up with first resistance at 2735.

-- Below 2720 implies it is going for another leg down, with first support at 2700.

Trade Guideline For Thursday

Nasdaq continued to crawl higher, a clear sign that the bear may be slowly capitulating, and once most have capitulated, we should see the market top and then reverse. Investor's sentiment is now clearly in topping territory, however, when will it top only time will tell. But for now the market is still going up.

Key Level For Thursday is 2752.

-- Above 2752 implies it is going to continue up, next resistance is 2775.

-- Below 2752 implies it is going into a pullback mode before going back up agai, with support at 2745 and 2735.

From Investor's Intelligence, posted in KWN - Market Topping.

With global stock markets on the move, contrarians are becoming increasingly fearful because bullish stock market readings have recently expanded to the highest levels in more than a year and a half.  The following is an extremely important piece because it shows this surge in the bullish readings on the chart below.

Stock market traders and investors should be aware, the bear may be about to come out of hibernation.  Here is the latest Investors Intelligence report along with the all-important sentiment chart:  “Modest additional index gains occurred last week as the primary indexes continue to trade around their best levels from 2012.  They have been unable to follow the smaller-stock averages to all-time record highs.  

Indicators remain overall bullish but more charts reached the levels of their prior tops so the short term risk remains high and intact.  Those facts are noted by the advisors but only a few reacted with weekly shifts.  The end result was ... bulls at lofty levels and showing a wide negative spread from the bears

Now we count almost as much optimism as in Sep and Feb-12.  Those two market tops saw the bulls just under 55%, that danger area has almost been achieved again.  Those readings suggested at least caution, which is called for again.  There could be still more bulls if the quarterly results continue to beat forecasts but some advisors are also adding some caveats to their overall positive outlook.

"The stock market may not sell-off immediately but the likelihood that shares will be lower in 2-3 months time has increased notably.  The current spread is up from just 9.5% mid-Nov.  Low ‘positive' readings often coincide with correction bottoms while large market declines see more bears than bulls (a negative spread) for even better buying opportunities.”

Trade Guideline For Wednesday

Nasdaq rallied into the closed ahead of Google and Apple earnings after the close. Whether or not the rally is going to continue into the open only time will tell, but all markets are now in breakout mode. 

Key Level For NQ on Wednesday is 2745 area.

-- Above 2745 implies it is going up, next resistance is 2775.

-- Below 2745 implies it is gpoing into pullback mode before rallying back up again, supports are 2732, 2722.

Trade Guideline For Tuesday

Daily Trend = UP in all Major Indices (S&P 500, Dow, Nasdaq, etc)

After opening gap-down and trend-down in the morning NQ reversed back during the lunch hour and continued up the whole afternoon, closing near the high. As long as it can stay above key support, it should continue its rally on Tuesday.

Key Support on Tuesday is 2732.

-- Above 2732 NQ should continue to rally, with ffirst resistance at Thursday's swing high. 

-- Below 2732 implies Friday afternoon rally has ended and it is going back down towards Friday low.

Market will Be Closed On Monday

Martin Luther King Day In The US

Trade Guideline For Friday

NQ continued to rally breaking above double-top with January 3rd swing high. 

Key Level For Friday is 2745.

-- If it triggers short-covering on Friday then we should see NQ continuing to rally.

-- Failure to hold above 2745 would imply pullback down.

Trade Guideline For Thursday

A 5-wave rally from Tuesday's swing low to Wednesday's swing high looks completed. Going forward, we should either see a sideways consolidation in the form of ABC wave pattern staying above Tuesday's swing low, or a sharp decline down to below Tuesday's swing low.

Key Level For Thursday is around 2720.

-- Consolidation above 2720 is bullish, and once completed NQ should rally back up to above last Friday 2747 swing high.

-- It is bearish below 2720, potentially declining below Tuesday's swing low, with next support at 2690.

The world’s leading economies are on the brink of a “currency war” to keep up with Japan and use devaluation to boost their competitiveness, Russia’s central bank said.

“Japan is weakening the yen and other countries may follow,” Bank Rossii First Deputy Chairman Alexei Ulyukayev said at a conference in Moscow today.

The yen touched its lowest level in two years this week against the dollar on bets the Bank of Japan will raise its 1 percent inflation target and introduce more monetary stimulus at its Jan. 21-22 meeting. The euro remained lower following a drop yesterday after Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the currency shared by 17 nations is “dangerously high.”
Reciprocal devaluations would hurt the global economy, Ulyukayev said today. Russia’s central bank, which manages the world’s fourth-largest stockpile of international reserves, didn’t buy or sell dollars or euros in December for the first month since at least August 2008, when the regulator started publishing the data.

Trade Guideline For Wednesday (NQ)

Second consecutive gap-down and pullback up day on Tuesday, but the stage is set for a gap-down and trend-down day on Wednesday 

Key Resistance For Wednesday is 2720.

-- Below 2720 implies a potential trend-down day, with key support at 2705 and 2690

-- However, above 2720 implies a bullish scenario, with rally expected to re-test 2747 swing high.

Bundesbank Reported Ready to Retrieve Germany's Gold From New York and Paris

Trade Guideline For Tuesday

Monday price pattern looks like Wave 1 and 2 down, with Monday's low as the low of Wave 1 when looking at it on the 5-minute chart, starting from last Friday's closing high. At the end of the day on Monday it looks set to commence wave 3 down. 

If so, it should trend-down or gap-down for wave 3 on Tuesday morning, and a break below Monday's low implies wave 3 is in progress with support zones coming it at 2715, 2700 and 2690.

Breaking above last Friday's high would invalidate this interpretation.

Iran’s economy minister says the country plans to phase out dollar and euro in its foreign trade

Iran's Minister of Economic Affairs and Finance Shamseddin Hosseini says the country plans to phase out dollar and euro in its future international transactions after the US and the European Union (EU) imposed sanctions on Iran.

Trade Guideline For Monday

Nasdaq continued to slowly push higher with Friday high just below double top with January 3 swing high 2747 area. A break above double-top would either rocket up if it can trigger short-covering, or reverses back shown sharply (false-breakout) if it does not have enough momentum to trigger a short-covering activities.

Key Level to watch for on Monday is 2730.

-- Above 2730 implies it should continue to push higher with first resistance at 2747.

-- A clear and sustained break below 2730 implies a retracement of the rally that started on January 8 at 2700. Supports are 2715 and 2710.

Currency War Continues To Intensify

The Japanese yen fell to the lowest level in more than two years on prospects Japanese Prime Minister Shinzo Abe will select a central bank chief who will expand monetary easing efforts to accelerate the currency’s decline.

Trade Guideline For friday

Key level For Friday is 2730
--Above 2730 NQ should continue to push higher, next resistance is 2747, then 2775.
-- Below 2730 implies more sideways consolidation with support at 2720, 2700, then 2690

Trade Guideline For Thursday

Another narrow-range sideways consolidation day on Wednesday, but NQ looks ready to break out above key resistance of 2730. If so, we can expect a fast short-covering rally and likely break through 2747 double-top resistance.

Below 2730 implies it is not ready to trend up, and we can expect another narrow-range sideways consolidation day with support at 2720, 2710, 2700, 2690.

$111B Texas Retirement Fund Manager: “Every Single Case of Hyperinflation…Was Preceded By Government Deficits That Got Out Of Control”

Trade Guideline For Wednesday

Another day of narrow-range sideways consolidation on Tuesday as NQ continued to trade above key support level of 2690. It should continue to trade sideways as long as it stays between 2725 resistance and and 2690 support.

Key Level For Wednesday is 2725.

-- As long as it can stay below 2725 NQ should continue to trade sideways unless it can clearly breaks below 2690.

-- A clear and sustained break above 2725 could trigger a wide-range short-covering rally with first target at 2747 resistance. 

Bloomberg: Japan To Buy European Debt With Currency Reserves To Weaken Yen 

Trade Guideline For Tuesday

Nasdaq traded sideways between key support at 2700 and key resistance at 2730 on Monday. It may be ready to make a trending move on Tuesday.

Key Level to watch on Tuesday is 2730. 

-- Below 2730 implies more consolidation but a clear and sustained break below 2700 could trigger a fast liquidation decline with the next support at 2665 area.

-- Above 2730 implies pullback has ended and the next trending leg up is in progress with the first target at 2747 area.

Currency War Continues To Intensify

Deflation Precedes HyperInflation

Deflation always precedes hyperinflation, with the most recent example of hyperinflation is the 2007 - 2009 Zimbabwe experience, and the Weimer Republic hyperinflation in the 1920's.. Although inflation and hyperinflation have similar traits as both entails rising prices, hyperinflation is in reality a currency collapse scenario, a situation when people lose confidence in a fiat currency and they all rush to exchange their fast depreciating with tangible goods.

Zimbabwe's economic disaster was built on terrible economic policy.

• Government spending was out of control. 
• Foreign debts mounting. 
• And then the government of Zimbabwe tried to solve its problems by turning on the printing presses.

Sound familiar? yes of course, it is now happening in the US and others in tandem. Here is how hyperinflation looked like in Zimbabwe.

Here is Weimer Hyperinflationary Experience

Deflation precedes hyperinflationary collapse with declining Velocity ff Money. Once panic sets in the velocity of Money starts rising. Here below is the current trend in the Velocity of Money in the US, and it is still in a downtrend.

Current US Financial Situation

Link to related article: http://www.safehaven.com/article/27471/tedbits-newsletter-october-2012-volume-1

Gold's performance during hyperinflationary collapse.

Link to gold-related article: http://www.fool.com/investing/general/2013/01/03/statistically-speaking-this-is-the-best-gold-miner.aspx

NQ Trade Guideline For Monday

Nasdaq completed a 5-wave rally on Thursday afternoon, then started ABC consolidation which continued into Friday. Once completed, the next leg up should resume.

Key NQLevel for Monday is 2730.

-- Above 2730 implies pullback has ended and the next leg up is in progress, targeting 2770. 

-- Below 2730 implies pullback/consolidation is still in progress, with support at 2700 then 2690. A clear and sustained break below 2690 implies it is going to close the gap 2660.

Trade Guideline For Friday

Nasdaq completed Wave 5 up early afternoon then decline into the close, wave A of an ABC correction down. Once completed, rally should resume, as long as key support 2695 is not clearly breached. 

Supports are 2720, 2710 and 2695. 2695 is a strong support level, hence a break could tank NQ down to close Wednesday's gap 2665.

Trade guideline For Thursday

The Fed overnight buying caused the market to gap-up at the open on Wednesday. Whether or not it is going to continue up on Thursday only time will tell, with the next major resistance is about 2775.

At the end of the day on Wednesday NQ was in wave 5 up from Monday low. Key support for Thursday morning near the open is 2720.

-- Above 2720 implies wave 5 up is still in progress.

-- Below 2720 implies wave 5 has ended, which should result in consolidation or reversal, with first support at 2710, then 2695, 2665.

Fiscal Cliff should continue to dominate the news and the market.

Trade Guideline For Wednesday

A gap-reversal UP day on Monday ahead of the decision on the US fiscal cliff. 

It seems some kind of a decision was reached early Tuesday morning. Whether or not the decision is bullish for the market only time will tell, but it is very likely the Fed will continue to push the stock market up in an attempt to delay the US inevitable collapse.

On Monday, NASDAQ rallied up in a 1-2-3 wave or ABC wave pattern from the day low. Key level to watch for on Wednesday morning is 2640.

-- If pullback can stay above 2640, NQ is likely in a 1-2-3-4-5 wave up pattern, with wave 5 going higher high after wave 4 pullback is complete.

-- Breaking clear and staying below 2640 however implies it was ABC wave up from Monday's low, once completed, expect consolidation or trend reversal. Supports are at 2620, 2595. A clear and sustained break below 2640 implies ABC wave up has ended.

Fiscal Cliff issues should continue to dominate the financial news and the market on Wednesday.