A bearish day in the stock market on Monday with NQ opening with a gap-down below breakout price level on the daily chart, 4830, and then remained below 3830 all day. The Dow futures was even more bearish with the low of the day just sitting right at lower bear flag channel that was formed starting about two weeks ago.
Major stock indices including the Dow, the S&P and NQ are setting up a very extreme bearish divergence as can be seen on the daily chart. However, the October selloff is not a guaranteed outcome simply because we do not have a free market. Central banks can still intervene to keep the stock and the bond market elevated by printing limitless amount of money to support the market. The key questions is, how would they do against a rapidly intensifying global deflationary forces.
For NQ, Monday low stayed above its 20-moving average on the daily chart (4800), and with its 50-moving average just slightly below it (4760), NQ would need to break below both the 20 and the 50 moving average to trigger an avalanche of selling algorithm. Until then, selling could remains under control.
Support for NQ on Tuesday will be 4800 and resistance at 4830.
