NQ Trade Guideline For Friday

Another large down-day on Thursday with profit-taking rally into the close. Whether or not the end of day rally is going to continue on Friday depends on where it trades in relation to key level, which is 2750 on Friday.

-- A clear break above 2750 has the potential to trigger a short-covering rally, with first resistance at 2767, then 2785.

-- Bearish below 2750, but it needs a clear and sustained break below 2725 to trigger another round of selling algorithm, with next support at 2710, then 2700. If a break below 2725 triggers a strong declining momentum, look for supports to break.

Thursday's Trading Guideline For NQ

On Wednesday NQ opened with a gap-down below 2805 support which turned into resistance, after a brief re-test, giving us opportunity to go short, collapsed towards 2755 support, stopped just above it.

On Thursday key level is 2775.
-- Bearish below 2775, but it will need a clear and sustained break below 2755 to trigger selling algorithm that can lead to liquidation decline.
-- Bullish above 2775, may trigger short-covering rally to 2805-2810 resistance zone.

Trade Guideline For Wednesday

A gap-up and trend-up day on Tuesday. Key level on Wednesday is 2830. 

-- Rally should continue above 2830 with the next resistance at 2857 area (double-top). There is a minor resistance at 2845 area that may stall price rally.

-- A pullback down below 2830 with support at 2805-2810

Trade Guideline For tuesday

A nice 5 wave decline from the opening high to afternoon low for NQ on Monday.

For Tuesday as long as pullback up does not clearly break above the FT Pivot area 2800 we should see another down-trending day.

However, a clear and sustained break above 2800 could either lead to a sideways consolidation or a short-covering rally. Resistance is 2829.

Gold Margin Selling

The Fed's attack on Gold may have backfired badly and the unintended consequences may get out of hand very quickly. 

Gold 10-Year Chart

Margin selling on Monday, which may continue into Tuesday, tank gold market hard, but it is not just gold that tank. Panic selling spread to many asset classes including stocks and commodities because traders who suffered losses in their gold trade has to sell whatever they own in order to meet their margin call. 

Next Support Levels are $1,345 then $1,290, but keep in mind that during a major liquidation selling could slice through support levels without pausing. 

Short is still the preferred trade direction until price action indicates otherwise. If the 2008-style market meltdown has been triggered, then gold may tank all the way down to $1,000 before finding support.

Another unintended consequences of the action of pure academics at the Fed, which they would never foresee, simply because they do not understand real world events, is the credit contraction caused by loss of confidence due to panic selling in gold that spread to other asset classes.

The current stock market bubble that the Fed has carefully engineered over the last several years may have unwittingly been popped. A sell-off in the stock market and the resultant credit contraction that will follow will cause interest rate to spike and the bond market to collapse.

Spiking interest rates and a collapsing bond market and the stock market is a perfect recipe for global financial meltdown. With central banks out of bullets, the meltdown will collapse most western government and their banks.

Trade Guideline For Monday (NQ)

Key Level For NQ on Monday is 2845 area.
-- Bullish above, either a trending move above last week high or pull back down from last week high which is now resistance.
-- Bearish below 2845 area, with support coming in around 2824. It would need a very bearish market internals to clearly break below 2824 support. Otherwise, it will rally back up from support.

Gold Smackdown

A very pathetic result of a major coordinated attack on gold orchestrated by the Fed through COMEX and London Metal Exchange, produced a mere $80 per ounce total decline in gold price, but closing only about $60 down from prior day close. 

The main goal of the coordinated attack is to prevent the inevitable collapse of the US dollar and to shake out the holders of futures contract who are planning to take physical delivery of the gold which the exchanges do not have.

Key point to remember as to why Gold smack-down occurred:

1. Both COMEX and London are running out of physical gold to meet the contract physical delivery obligations. 

Otherwise there is no reason for the US to invade Libya who has 450 tons of gold reserve just enough to satisfy Venezuela's gold repatriation request, and invasion of Mali who produce just enough gold over a 7-year period, just enough quantity to satisfy Germany's repatriation request promised to be delivered over a 7-year period.

2. The attack on gold is to discredit gold as an alternative reserve asset to the USD. 

Make no mistake, the sun has set on the US dollar as a reserve currency. Australia being the latest major country to abandoned US dollar as a reserve currency. Central banks are rapidly converting their US dollar holdings into gold. When the trillions of US dollar now being held at Central Banks around the world, unwanted and unloved, starts to come back to the US soil, the US dollar will collapse in a rapid fashion.

The coordinated attack on gold started last week with:

1. The released of the FOMC minutes stating that the Fed may end their QE program soon. 

2. The announcement by the EU that they are going to sell 400 tons of Cyprus gold reserve

3.  The closing of the Physical Gold Trading Platform in London designed to trap the holders of long gold bullion contract, forcing them to go Short the Futures Contract, and to eliminate potential buyers of gold bullion.

4. The naked short-selling of 400 tons of gold by the Fed agents right at the open on Friday, designed to crash price below key gold support level $1,540, and triggers stop-losses sell orders propelling price decline.

It does not matter what the market manipulators are doing. My proprietary band is still telling me to stay on the sell side of the gold market. with the next downside target price of $1,450 to $1,410. Where and when gold price will stop falling only time will tell.

But a credit collapse like the 2008 has the ability to tank gold as well as every asset prices. This time, credit contraction will be much more severe than the 2008 collapse. The Fed and Western Central Banks are out of bullet. Interest rate is already zero, and debt level is already way too high.

The coming sequence of events will start with Sovereign (country collapse), banking collapse, credit collapse, asset price collapse, massive central banks QE response to "save" the collapsing financial system, then currencies collapse, then the new monetary system based on some form of gold standard, new prosperity. 

Trade Guideline for Friday

A sideways consolidation day following a large trending up day on Wednesday. Key resistance for Friday is around 2857.50.

As long as price cannot breakout above, but more importantly, if it cannot stay above on a break, look for NQ to continue to consolidate sideways.

A clear and sustained break above 2857.50 could lead to another fast rally.

Trade Guideline For Thursday

Massive buy program likely engineered by the Federal Reserve after the release of the FOMC minutes before the market open pushed the equity indices into higher-high. 

For Tuesday, as long as the Fed remains in the market, it is either going to trend up again or goes into choppy sideways consolidation.

As Japan goes into QE overdrive, Japanese Yen is in free-fall

Trade Guideline For wedensday

Early morning decline stay above key support level and above the band on Tuesday which eventually lead to a fast short-covering rally breaking above resistance

On Wednesday key level to watch for is 2800.

-- Continuing short-covering rally above 2800.

-- A clear break below 2800 implies wave A down is in progress, and, if it is followed by a choppy pullback up to the band, it should then lead to wave C or 3 decline. Supports are 2785-2790 strong support, then 2772.50