With the Fed destined to project a hawkish stance regarding their interest rate policy when they meet this weekend at Jackson Hole, in order to give some support to collapsing USD and at the same in order to whack gold rally could inadvertently cause a stock market crash in the very near future simply because the market is primed to crash. All it needs is a trigger, and a hawkish Fed may be the trigger for late summer selloff.
On Wednesday, ahead of the Jackson Hole Friday speech by the fed Janet Yellen the stock market sold off and gold was whacked pretty hard. Unless the Fed would tone down their hawkish rhetoric at their Jackson Hole meeting this weekend the stock market selloff may have just begun.
On Wednesday the day low for NQ was right at its key 20-DMA support, a break below is an indication NQ is going down to retest its price breakout level at 4700. Though it is a bit to early to speculate, should NQ selloff clearly break below 4700, an avalanche of sell orders could quickly take NQ down to 4600.
Bearish Divergence below = a setup for stock market crash.
On the short term time frame, on Thursday key support is 4771. A key indicator to watch on Thursday will be hint/s of what Janet Yelling of the Fed would say in her speech on Friday.
-- A clear and sustained break below 4771 could trigger selling that could quickly take NQ down to 4700.
-- Staying above 4771 should keep sellers at bay, first resistance is at 4810.
