2017 will be a year of massive chaos not only in the financial markets, but also chaos in the economy in general. The bond market collapse has begun, the high-end real estate collapse has begun, the stock market collapse should follow next followed by the dollar collapse.
On the shorter term time frame, January could be a bearish month as investors take profit. With everyone currently long the stock market and holding fat profit, look for potential mad rush to cash out to lock-in profit in anticipation of a lower capital gain tax from Trump Presidency.
We could see a flash crash unless the Fed is ready with unlimited amount of capital to absorb the avalanche of sell orders. However, with the stock market still in a very bullish mode on the long-term timeframe (weekly and monthly), unless critical support gets clearly breached, look for the stock market to bounce and rally again after the initial bout of profit-taking selling.
On the 5-minute timeframe, key support is at 4850 and key resistance is 4900.
-- A breach of 4850 support could quickly tank NQ down to 4800.
-- As long as 4850 support is not violated we can expect a rally in the market or a sideways consolidation. A sideways consolidation is not a likely event because traders and investors are initiating new positions.
