Guideline for Tuesday

With most traders out of the office this week, Tuesday's price action could be the same as Monday's action, a sideways choppy actions.

Key inflection (support/resistance) price level for Tuesday is 3565.

-- Bullish bias above

-- Bearish bias below

Guideline For Monday

NQ traded down on Friday, broken down through 3570 support, but then rallied back up to re-test broken support - now resistance at the 4:15 close

For Monday the morning trend will depend on where it trades in relation to its support/resistance price level 3570.

-- It could opened with a gap-down and run down to the next support 3535, or, it could opens below 3570 and then trend down to support 3535 in the morning. Strong support lies at 3520.

-- Or NQ could open above 3570, then run up to test Friday's swing high.

Guideline For Friday

The Fed's buying algorithm should continue into the new year, albeit, in a slow and choppy fashion simply because most investors are already long the market. Fed's buying should continue into the new year just to make sure that Janet Yellin looks good when she officially take over the Chairmanship from Ben Bernanke in January 2014.

However, major indices are now in overbought condition on the daily chart, and may or may not pullback until the new year, so unless the market breaks major support the uptrend should continue.

Guideline For Tuesday

NQ opened with a gap-up and trend-up all day on Monday. The market is now in overbought territory on the daily chart and may attract some profit-taking selling, 

But with the holidays ahead of us, the Fed buying algorithm will be in full speed to ensure that the market continues to go up. If so, the trend may just continue to go up without much pullback, albeit in slow motion.

Guideline For Monday

NQ continued to rally on Friday as the shorts continued to get squeezed. The equity market should continue  to rally into Christmas and the New year as the Fed buy programs should be going into high gear making sure that the market would look good for the Christmas and the New Year holidays.

NQ (overnight trading) is currently trading much higher than Friday's high, and may opens with a gap-up. If so, Friday's swing high will be the first support, then Friday's close will be second support.

Guideline For Friday - NQ

Keep in mind that Friday tends to be a bullish day. In addition, the Fed buyers will want to hold the market up going into the weekend and into the new year, and they are going to spend whatever amount of money it takes to keep the market up, so unless the market breaks down below certain key support level, the trend is up.

Short-term key support level is 3475.

-- Staying above 3475 keeps NQ in a bullish mode. If so I will be looking for an up day or a sideways consolidation pattern on Friday.

-- A clear and sustained break below 3475 is bearish, looking for it to drop down to supports, first support at 3455 then 3430.

The Fed's current trade is to Sell Gold - Buy Equities - The smart thing to do is to continue to follow the Fed. At some point, however, any manipulated market will revert to its mean - the trades will get reversed, and then we must reverse our trades accordingly.

Guideline For Thursday

As mentioned in yesterday's blog, the Fed buyers were ready to buy the market, but no one in the right mind could ever imagine the monstrous size of the Fed buy programs that were engineered immediately after the FOMC announcement on Wednesday, designed to panic the short-sellers and send them back into hiding.

The Fed's actions, more blatant and more desperate, clearly demonstrates that the end game, either a deflationary collapse or a hyper-inflationary collapse, and the end of the Federal Reserve, is coming near, their action becoming more and more desperate. On one hand, they announced tapering of their QE, but on the other hand, they spends billions and billions of dollars buying up the markets.

Whether or not the Fed buying binge on Wednesday would continue on Thursday and beyond, and more importantly, whether or not they can attract  new buyers into the market that could help propel the market into higher highs on Thursday and into the near future, we just have to wait. As with any manipulated market, all we can do is to trade price actions

For Thursday, key price level to watch for is 3475.

-- Pullbacks that can stay above 3475 will attract buyers, target higher high above Wednesday swing high.

-- A clear and sustained break below 3475 will turn buyers into sellers, targeting Wednesday's swing low.

Guideline For Wednesday

The Fed will be releasing their FOMC decision in the afternoon on Wednesday. The market may continue to be choppy until their release and then the market should move one way or the other soon after.

The market has factored in a No-Tapering decision.

-- Any hint of tapering could cause a sell-off, and no tapering could also cause a sell-off, but the Fed buyers will be ready with their buy programs.

-- The market may rally if the fed hint a potential increase in their bond purchase in the future.

Key inflection price level to watch for on Wednesday is still 3475.

Guideline For Tuesday - NQ March 2014

A large gap-up opening for NQ on Monday was successful in triggering a fast short-covering rally, but once the Fed buying and short-covering frenzy ended the market dropped back down to 3475 support , eventually broke below support  in the afternoon.

NQ closed below 3475 support, and if NQ does not re-break back above 3475 on Tuesday it may trigger another round of selling. 

Whether it will trend down on Tuesday ahead of the FOMC meeting it is very difficult to say, only time will tell, but the Fed is surely be actively buying the market ahead of the FOMC announcement on Wednesday.

Key inflection price level on Tuesday in NQ is 3475.

-- Resistance is 3500

-- Supports are 3455 and 3435. 

Guideline For Monday

Thursday and Friday were two narrow-range sideways consolidation day following a large range down-day on Wednesday - they were "paused" days, that should be followed by either a large-range down day or a large-range short-covering reversal up-day.

The direction of the move will depends on where NQ will trade in relation to the last 2 consolidation days.

1) Clear and sustained break below Friday low is an indication that we may get a large-range down day on Monday. This is assuming it can break the first support which is around 3425 area. Strong support lies at 3400, and it would need a very bearish internals to break 3400 support.

2) A clear and sustained break above 3480 could trigger a short-covering rally, with next resistance at 3500

3) Staying inside  the 3450 - 3480 trading range would implies another day of choppy sideways market.

Guideline For Friday

NQ stayed below 3480 key resistance and traded sideways between 3480 resistance and 3455 support. The trading range 3455 - 3480 will become very important on Friday.

First we must remember that Friday is usually a bullish day as short-sellers tends to close their position by going long. However, with such strong selling pressure NQ would need to clearly break and stay above 3480 resistance to trigger a strong short-covering rally.

Staying in between 3455 and 3480 implies more consolidation. 3455 is a very strong support for NQ. However, should it clearly break and stay below 3455 it should attract a lot of selling, next support is 3420 then 3400.

Guideline For Thursday - mainly NQ

Wednesday was a profit-taking day for the bulls worried about the Fed's QE taper talk and the implementation of the Volker Rule. The sell-off continued all day without much pause.

Whether or not the Fed buyers would come in strong on Thursday it is very difficult to forecast because we are not dealing with free market, all we can do is watch price levels. 

Key price level for Thursday is 3480.

-- Below 3480 is an indication NQ is going to either consolidate sideways or continue to selloff. Next support is 3455 area.

-- A clear and sustained break above 3480 has the potential to trigger a short-covering rally, next resistance is 3500

Guideline For Trading NQ - on Wednesday

Another very narrow range sideways action on Tuesday. The market  needs some pullback-down move to generate larger trading range, simply because all the shorts that wants to cover are all out of the market, and most of the buyers that wants to buy has bought. 

That left mostly the Fed buyers pushing the market up day in day out, and without any major new participants, the up move is going to be small and slow.

NQ closed at its key price level on Tuesday, and after two day of consolidation NQ may be ready to make a bigger move - upwards, but only if it can find lots of new buyers. And as long as it can stay above 3515 NQ is either going to continue to trade sideways or rally up to the next upside target - 3535.

Trading below 3515 is an indication NQ is going for a larger pullback down, next support 3500.

Guideline For Tuesday - NQ

With the Fed determined to push the market up into the new year, NQ should continue to move higher -- with the market usual opening with a gap-up and then trade sideways for the rest of the day.

The pattern should continue, so the current trade is to go long near the close and exit at the opening gap-up open, until of course it stopped working

NQ key support level for Tuesday is 3510.

-- Above 3510 implies the market should continue to make higher-high before pulling back down. 

-- Below 3510 is an indication that NQ is pulling back down to lower support level, 3500.

Guideline For Monday

A gap-up open for NQ on Friday. With Janet Yellin taking over as Fed Chairperson in January the Fed is going to continue to spend massive amount of capital buying the market to make it looks like the market likes her. 

Whether or not the market will continue to rally into the end of the year only time will tell, but the Fed actual monthly QE amount is currently much more than 85 billion, it is in fact about 200 billion a month and is likely going to increase as we nears Janet Yellin's inauguration.

More money creation implies more rallies and faster upward momentum in the stock market and many other tangible assets as the dollar continues to collapse - not collapsing against the other currencies but against real assets - except precious metals as the Fed trade is Buy Stocks - Sell Precious metals. The trade is going to continue until the whole system collapses.

Here is how the stock market looks like during a currency collapse.... up up up up faster and faster

In the short-term, NQ key price level for Monday is 3505.
-- Above implies NQ is still going up to its next target, 3550 area.
-- Below 3505 implies consolidation before going back up again. Target down is 3490-3495. 

*** -- Only a clear and sustained break below 3490 implies wave 5 up - on the 60-minute chart, which started from the November 17 swing low, has ended. If so, we look for ABC correction wave down that will retraced the entire move up from the November 17 low to the current high.

Guideline For friday - NQ

Another  sideways consolidation on Thursday trading between 3470 support and 3490 resistance for NQ, and looking more and more like a distribution pattern. 

There seems to be a lot of buying algorithm as NQ dropped down to 3470 on Thursday. As long as NQ does not clearly break below 3470 it should continue to trade sideways or upwards. 

Breaking down clearly below 3470 however, will change the buying algo into selling algo, with the next major support not until 3425 

Guideline For Wednesday- NQ

Another sideways consolidation day for NQ on Tuesday. At the end of the day it looks ready to rally back up to re-test Monday's swing high. To do so, it has to clearly break above 3485 resistance 

Failure to break and stay above 3485 implies more consolidation or downtrend. To trend down, NQ would need to clearly break below 3455-3460 support zone.

Next strong support is not until 3420-3425, although there is some support at 3435.

Guideline For Tuesday - NQ

NQ traded sideways on Monday, with a close just at inflection price level level 3485, support is at 3475 and resistance is at 3490. It can of course continue to consolidate unless it can clearly break out of the 3475 - 3490 trading range.

A break that fails would implies a reversal targeting a break through the opposite support/resistance.

Guideline For Monday

With the new Fed chairperson taking over in the new year it is in the Fed's best interest to continue to push the market up to make sure that Janet Yellin looks well liked by the market.

Whether or not the Fed buy programs will continue to rally the market into Christmas and the new year only time will tell, but they will definitely try their best. For now, the Fed is causing panic buying as the short-sellers starts to capitulate and covers.

Whether or not the current rally is the beginning of the hyperinflation it is difficult to determine but the US stock market does looks like Zimbabwe stock market index at the beginning of their hyperinflationary collapse. 

The Fed CANNOT taper their QE, instead, the Fed has to increase the amount of their QE