Equity mutual funds recorded the second-highest inflows on record in the first week of the year. ... About $22 billion flowed into equity funds around the world. Bloomberg, Jan. 11
Clearly a red flag, as most investors are bullish at market top and bearish at market bottom.
Well, investors were also bullish on Oct. 9, 2007, just before the Dow's all-time closing high. Just days earlier (the third week of September 2007), equity fund inflows hit an all-time record of $23 billion. Look at the chart.
On Monday, Nasdaq opened with a gap-down and trend down all day closing at the low of the day, clearly with a very bearish momentum at the close, further cementing a bearish Head & Shoulder pattern on the NQ daily chart. Monday sell-off could be the start of a new bear market, still at a very early stage, as one day sell-off does not make a trend.
For Tuesday, we could either see a consolidation pullback-up day or another liquidation decline day.
-- Consolidation / pullback up target is 2730 - 2740.
-- Next downside target is 2700-2705 and 2690. On a strong sell-off, the next support is 2660
Although it may be too early to forecast, on a longer-term basis, the downside target of the Head & Shoulder pattern on the daily chart for NQ is 2150, a 600-point drop.
-- Bear market downside target, once the sell-off commences, is down to 1900 at a minimum (assuming we don't get a panic crash).
Bearish (inverse) ETF, Nasdaq 100 = PSQ, Ultrashort Nasdaq 100 QID.
For S&P 500, Bearish ETF is SH, and Ultrashort S&P500 = SDS
