Guideline For Friday

As usual, after an early morning pullback, NQ resumed its uptrend in its usually choppy way for a total range of 22 points from day low to day high. As long as NQ does not violate its prior day low, the uptrend should continue.

Key support level for NQ on Friday is 3725.

-- As long as pullback does not clearly violates support the uptrend should continue to higher -high.

-- In the event that NQ clearly break below support it may be heading to a lower-low below prior day low.

Sell-off in gold continued on Thursday, now just above 1250 support.

Guideline For Thursday

On Wednesday NQ traded sideways in a narow trading range on top of prior day upper trading range. Whether or not Wednesday sideways action is a setup for the next upleg, or a prelude to a larger pullback down , will depends on where it trades in relation to key inflection price level on Thursday.

Key inflection price level for Thursday is 3710.

-- Staying above 3710 is an indication that NQ is either going to trade sideways or continuing its uptrend. In order to regain its momentum NQ would need to break and stay above 3725 and trigger another round of short-covering. If so, the next upside target a3750. Failure to break above and stay above 3725 implies contiued consolidation.

-- Breaking below 3710 implies a move down to 3700 support. If support holds, NQ shoudl rally back up to the upper trading range again. If 3700 support is breached, it may attract algo sellers that could take NQ down to 3670 support.

Gold sell-off continued on Wednesday, dropping down to strong support zone 1250-1260 area. Should 1250 is breached it could attract algo sellers that could quickly tank gold down to the 1200 support level.

Guideline For Wednesday

A combination of Fed buying and short-covering continued to push the market higher with very small pullbacks, and pullbacks are getting smaller and smaller. The market is clearly in a capitulation phase at this time.

When all the shorts have covered and are out of the market, when everyone are on one side, the reversal can be sharp and swift. When that reversal will be, there is no way to tell, and it can go on longer than everyone thinks.Ket to trading the capitulation market is to go long with stoploss, or trade the market using long call options, because a long call options has a built-in stoploss.

For trading this fast uptrend using the 50-minute chart, as long as the abc wave pullback does not clearly violated the 50-moving average, we want to be on the buy side.

Clearly breaking below the 50-ma is an indication the market is going into an abc wave retracement or a possible alrge pullback down. However, a rally-back above the 50-ma is a long signal  

Gold market shakeout has begun, the goal is to shakeout most of the stubborn longs, the shakeout has to occur before the bull market can resume, target cycle bottom  is in July.

Guideline For Friday

On Thursday the market rallied all day with just a small profit-taking decline at the close. Although we should always expect the unexpected, with most traders out of the office for the long weekend, look for a choppy and narrow-range day on Friday.

Inflection price level for Friday is 3655.

-- More short-covering rally above 3655.

-- NQ is going into pullback mode below 3655. Support levels are 3640 then 3625.

Guideline For Thursday

A narrow-range choppy short-covering up day on Wednesday for NQ, closing at the day high, positive momentum going into the close.

The short-covering rally should continue on Thursday as long as any pullback does not clearly break 3625 key inflection price level.

-- A break below 3625 implies NQ is going into a larger pullback down, support is at 3610. As long as 3610 is not violated NQ should resume its uptrend.

-- A break below 3610 would find the next support at 3600. A break below 3600 could trigger algorithm sell program.

Guideline For Wednesday

NQ dropped down to 3600 soon after the open, then rallied up to a higher-high after finding support at 3600. The rally was choppy and after making a higher high dropped down hard, breaking below 3600 support.

The afternoon rally that continue into the close was choppy, closing just below the key inflection price level for Wednesday, a setup for a strong trending move in either direction. Whether the trending move comes before the release of the FOMC minutes at 2 pm only time will tell.

Key inflection price level for Wednesday is 3600.

-- Although bullish above 3600, NQ would need to clearly break above 3615 to trigger algorithm buy programs that can cause a massive rally. However, 3615 has been a strong resistance area and it may continue to be a strong resistance.

-- Bearish below 3600, and a potential liquidation drop if it can clearly break below 3585 and then break below 3570 potentially strong support.

Trade Guideline For Tuesday

Monday was a continuation of the end of day Friday's uptrend, an open-drive wave 3 rally. After a lunch pullback, likely wave 4, NQ made a higher high at the end of the day.

If wave 5 has ended, NQ should go into a pullback down mode on Tuesday. As long as the pullbck does not violates key support, the uptrend should resume. 

Breaking below key support is an indication that larger pullback down is in progress.

Key inflection price leve for Tuesday is 3610.

-- Trading above 3610 implies wave 5 rally is still in progress, targetign a break above May 13 swing high at around 3624.

-- A clear break below 3610 is an indication NQ is going into a consolidation down mode. with key support at 3600. A clear break below 3600 could trigger momentum algorithm sell programs than can tank the market hard, next support is 3570, then 3540.

Guideline For Monday

On Friday, NQ consolidated sideways most of the day, only to rally near the close of the day as traders cover their short going into the end of the day. At the end of the day on Friday, NQ is back in the bullish mode, and as long as key support is not clearly violated, NQ should continue to go up.

Key price level to watch for on Monday is 3570.

-- As long as pullback can stay above 3570 NQ is in a bullish mode, but it has to clearly break above 3590 to trigger momentum algorithm buy programs, but resistance are 3600, 3610. ADR upside target is at 3617.75.

-- Bearish below 3570, next support is at 3540. A clear break below 3540 should trigger another rounds of momentum algorithm sell programs, first downside target is 3500. ADR downside target is at 3526.

Guideline For Friday

The market tank hard in the morning on Thursday before finding support, then spent the rest of the day consolidating the big down move. 

NQ opened below key inflection price level, then tank hard, down to second layer of support. Unless the market can mount a substantial rally, the summer sell-off may have just begun

Key price level for Friday is 3560 for NQ and 1870 for ES.

-- Trading below key price level is bearish, but would remain in a choppy mode until it can break below Thursday swing low. 

-- A clear break below Thuresday low is likely to trigger another round of liquidation decline. Lower support for NQ is 3480-3500. In the event that 3480 is broken, NQ should quickly crash down to 3400

-- Trading above 3560 implies NQ is still in a pullback-up mode, next resistance is at 3583, then 3600

Guideline For Thursday

On Wednesday the market spent most of the day trying to break clear above 3610 key resistance, but its inability to breakout attracted late day algo sellers which tanked the NQ down to just above 2580 support.

The end of day profit-taking rally took NQ back up to just below 3600 support-now resistance. If NQ is not able to break-back above 3600 it could attract algo seller that can tank the market hard, expecially if 2580 support is clearly broke.

Key price level for NQ on Thursday is 3600.

-- Bearish below, next support is 3580 then 3545 and 3500

-- Bullish above 3600 but NQ would have to clearly break above 3610 to trigger another round of short-covering rally.

Guideline For Wednesday

After making a higher high in the morning, and after a trending-up day on Monday, NQ spent the rest of the day consolidating, closing just below key inflection price level. Once consolisdation ends, the uptrend should resume, that is, as long as key support holds.

Key inflection price level for Wednesday is 3610 in NQ.

-- Trading above 3610 is an indication consolidation has ended and that the uptrend is resuming.

-- Trading below 3610 implies NQ is still in a pullback mode, with key support coming in at 3600. As long as 3600 support holds, NQ should resume its rally, but it has to break-back above 3610 to trigger algorithm buy programs.

-- A clear break below 3600 is an indication NQ is going into a larger pullback down, next support is 3580

Guideline For Tuesday

NQ opened with a large gap-up on Monday and then trended up all day (open-drive) closing at the day high.

The uptrend is likely to continue to the next resistance, with or without a consolidation. The next resistance is 3665 area - a double-top with April high.

Key level to watch for on Tuesday is 3610.

-- As long as NQ stays above 3610 short-covering should continue, next upside target is 3665 resistance. Whether or not it will break 3665 before pulling back, only time will tell.

-- Below 3610 is an indication NQ is going into a pullbacl mode, and as long as key support is not violated, the uptrend should resume once consolidation has ended. Key support is 3565 area.

Guideline For Monday

NQ traded sideways on Friday closing just above key inflection price level for Monday, but still stuck inside a 100-point trading range between 3500 to 3600. As long as NQ continues to stay inside the range it should continue to be choppy.

However, a clear and sustained break out of the range could trigger a sustained trending move in the direction of the break, but until then looks for NQ to stay in a choppy mode.

Key inflection price level for NQ on Monday is 3545, 

-- Trading above 3545 is bullish with the next resistance at 3580 then 3600.

-- Bearish below 3545 with first support coming in at 3515 and then 3500. 

With the US$ on the verge of a massive collapse, a coordinated intervention by the Fed and the ECB on Thursday and Friday to push the US$ up delayed the US$ collapse, at least for now. The goal of the intervention is to push the Euro down to serve as a source of funding currency for the carry trade and avoid US market meltdown, at least that's the goal.

 

Guideline For Friday

On Thursday, massive algorithm buy programs were triggered ahead of Janet Yellin testimony before Joint Comittee, rocketing the market upward. However, sellers quickly came in with a vengence, tanking the market back down, erasing all the morning gains.

 

NQ is currently stuck inside a 100 point trading range, between 3500 support and 3600 resistance. Until it can clearly break out of the range, it may continue to swing back and forth between 3500 and 3600.

Inflection price level for NQ on Friday is 3545.

-- Bullish above, resistance are 3575-3580. 

-- Bearish below, support is 3500. A clear break below 3500 could trigger massive algorithm sell programs, with the next support at 3480. Should 3480 breaks algo sell programs should quickly tank NQ down 3400.

Guideline For Thursday

On Wednesday NQ opened above 3545 key support but was unable to stay above, then quickly break down below support, as expected, triggered massive algorithm sell programs, tanking NQ down to the next support. ES also broke below key support.

But large buyers, most likely the Fed, triggered massive buy programs to help push the market back up, NQ closed just below prior support (3545) now resistance. 

For Thursday NQ 3545 will remain as key price level to watch for. and 1868 for ES

-- Failure to clearly break back above 3545 could attract new sellers that could push the amrket back down to support 3520 then 3500. Breaking below 3500 could trigger another round of algorithm sell programs, next support is 3480. A clear break below 3480 could cause margin call liquidation selloff, next support is 3400.

-- If NQ can break-back above 3545 and then stayed above 3545, we could see another round of short-covering rally, next resistance is 3575 the 3610.

-- ES will remain in a bullish mode above 1868, but ES will be in a bearish mode below 1868

Guideline For Wednesday

The market opened above key inflection price level (support) on Tuesday, but a big gap-up opening for the Japanese Yen and the simultaneous massive sell-off in the US$ triggered some unwinding of the Yen carry trade, and it was too much for the market to bear, as it eventually broke below inflection price level, triggering a sell-off, closing just near the low of the day - a negative momentum going into the close.

 

Both NQ and ES closed just above key support level for Wednesday, 3545 for NQ and 1862 for ES.

-- Ability to stay above key support is an indication Tuesday's selloff has ended and that it is going into a pullback-up mode.

-- Trading below key support could trigger algorithm sell programs that could tank the market very hard. Support for NQ is 3480-3500, for ES the next support is 1830.

The Yen carry trade should continue to be a major influence on the market, A rally in Yen is bearish for the market, a pullback in the Yen is bullish for the market.

On Tuesday, Yen opened with a huge gap-up, and the US$ tank hard. - causing unwinding of the Yen carry trade.

Guideline For Tuesday

On Monday, the market opened with a large gap-down but was quickly being bought, very large algorithm buy programs most likely engineered by the Fed quickly pushed the market back up into bullish territory. 

The bullsih momentum going into the close should continue on Tuesday, next upside target is a higher high above Monday's swing high, that is, as long as it can stay above key price inflection level.

For Tuesday key inflection price level is still at 3585 for NQ and 1876 for ES

-- As long as NQ and ES can stay above inflection price level the market is going up to higher high. Next resistance for NQ is 3600, then 3620.

-- Trading below inflection price level is an indication the market is going into a pullback mode, but will remain in a bullish mode as long as Monday's swing low is not violated. 

-- Breaking below Monday swing low could trigger massive algorithm sell programs, next support is 3500 for NQ.

The conflict in the Ukraine is quickly getting out of control and gold is benefiting from the dangerous situation. If the situation in Ukraine continue to deteriorate gold should continue to rally.

Guideline For Monday

A pullback down day for NQ on Friday, and a close just below key inflection price level for Monday. Depending on where NQ trades in relation to its key inflection price level, we can either have a rally on Monday or a second pullback down day.

Key inflection price level for Monday is 3585, support is 3545, resistance is 3610

-- Trading above 3585 is bullish for NQ, with resistance at 3610

-- Below 3585 is an indication NQ is still in a pullback down mode, next support is at 3545continue. NQ needs to clearly break below 3545 to cause liquidating margin call selling.

Margin Debt - The last 2 times this happened, the Stock Market Crashed

From Testosterone Pit

The last two times when margin debt reversed and fell after a record-breaking spike, all hell broke loose. In 2000, it was simultaneous. In 2007, it was delayed by a few months. Today, on the surface, everything is still hunky-dory. The Dow is just fractions below its all-time high that it set on Wednesday. But beneath the surface, parts of the stock market are already coming unglued, and holders of momentum stocks have been eviscerated.

 

It isn’t the spike per se that matters, but when the spike reverses. So in March – the New York Stock Exchange released the numbers Wednesday evening – margin debt declined by over $15 billion. Instead of plowing $15 billion in barrowed money into stocks, as they might have during the upward momentum of the spike, investors yanked out $15 billion – for a difference of $30 billion compared to prior months. And that moolah they yanked out doesn’t sit on the sidelines. It dissipated into thin air by being used to pay off debt. The last two times that reversal happened, the whole construct came tumbling down.

Parts of the market have already tumbled. Momentum stock traders have taken a drubbing, and some of those who trade on margin received margin calls and were forced to sell, and others dumped their positions to avoid getting wiped out. It’s bloody out there, in momentum stocks. They’re the ones that go first. And the last two times, they didn’t go solo.

 

The Nasdaq Biotech Index had beautifully shot up along an exponential curve. Then the hot air hissed out of it, and it swooned 21% in six weeks. The index includes big players, like Biogen, not just startups with big dreams and no drugs. After some buying on the dip, the index closed on Thursday down "only" 15%. But that hasn’t saved smaller momentum stocks: Exelixis is down 58% from its 52-week high and 92% from its all-time high shortly after its IPO in early 2000; Halozyme is down 60% from its high in early January. And so on.

In the social media space, the bloodletting has been ugly. The Social Media ETF SOCL is down 23%, but stronger stocks like Facebook (down 16% from its high a month ago) paper over individual fiascos, like Twitter, which has plummeted 48% from its peak last year to below its IPO price.

Other momentum stocks are getting annihilated: Amazon down 25% since January, Netflix down 27% in just two months. From their peaks, Pandora crashed 39%, Gogo 63%, and Imperva, a Big Data security outfit, 65%.

To hedge or to benefit from potential upcoming bear market, we can either buy put options on QQQ, SPY, DIA, or short them, or buy Bear ETF, symbols for Bear ETF are PSQ for Nasdaq 100, SH for S&P 500, and DOG for Dow

Guideline For Friday

On Thursday, after rallying up to resistance and making another higher-high  in the morning NQ spent the rest of the day pulling back down to support, making Thursday a neutral "pause" day. 

Key inflection price level to watch for on Friday is 3590

-- Bullish above 3590, it should trigger another round of short-covering rally, next upside target is 3620.

-- Bearish below 3590 but NQ would need to break below Thursday's swing low to trigger algorithm selll programs. If so, supports are 3560, 3540.