Following China's stock market crash on Monday the US equities sold off hard during Sunday night trading and opened with a huge gap-down. NQ opened down over 100 points on Monday and then sold off hard, only to be partially rescued by massive Fed buy programs near the close.
The rally should be short-lived unless of course the Fed is willing to spend unlimited amount of money to buy all the stocks just like they are doing in the bond market. But printing unlimited amount of money to support the market could risk collapsing the dollar, a delicate balancing act indeed.
Both the S&P 500 and Dow Futures have broken below their respective 200-DMA, thus in order to at least temporarily stall selling avalanche both has to re-break back above their 200-DMA. Failure to do so should intensify selling pressure and can easily drag NQ down below its 200-DMA.
Leading indicator is now indicating that recession in the US is imminent, if not already in recession.
