Spooked by President Trump global trade war rhetoric, an already massive stock market bubble may be starting to get unhinge. Both the Dow and the S&P 500 stock index did not may a higher high. Instead both seems to confirm a lower high retest of the record high recorded in January, an Elliott wave 2 pullback.
If so, the next down leg will be very devastating, an Elliott wave 3 down, or wave C, but either one tends to be fast and large.
As such, with most investors aggressively bought the recent February pullback, the lower the stock market goes, the more intense selling would become as investors position get liquidated on margin selling.
For Tuesday, NQ support is now at 6850 and resistance at 6950, a 100-points trading range.
-- A break below support could lead to massive selling as traders position gets liquidated.
-- Staying above 6850 may keep selling under control, but NQ has to break back above 6850 to lower the risk of heavy selling.
