Major equity indices opened with a gap-down on Thursday as credit crunch started to hit China financial system. The US equity market may be making a top, with market configuration between the Dow, S&P 500 and Nasdaq similar to the 2007 stock market top.
In 2007 market top prior to the crash, Nasdaq continued to move higher for at least 3 more weeks after the Dow and the S&P 500 has started its downtrend.
As always, at market top, most traders and investors are very bullish, selling off blue chips stocks in favor of growth technology stock represented by Nasdaq stocks, hence at market top, Nasdaq stocks will stay strong for a while longer.
Going forward, looks for Nasdaq stocks to remain stronger than the Dow and S&P stock for about 3 weeks longer.
For Friday, without another market-moving news, the market should consolidate or move higher on short-covering. To do so, the indices should stay above key support, 3590 for NQ and 1818 for ES.
More selloff to come on a break below key support levels.
-- NQ resistance are 3520 and 3535.
-- ES resistance are 1825 and 1830
A wave of Chinese default may be underway and could spread way beyond China.
