NQ Guideline For Tuesday

The stock market was closed for Martin Luther King holiday on Monday, but last week Friday was a huge sell-off day, the stock market remains in crash mode, with NQ breaking down below my 4100 support zone before rallying back above it in the afternoon.

 

The momentum of the current decline on the daily chart has not slowed down a bit, an indication there is more room to the downside before a significant counter-trend rally can be expected. In order to get a short-term bottom in the stock market the price of crude oil needs to stabilize and it is currently still in crash mode as well.

 

Key price level for NQ on Tuesday will be 4100.

-- Trading above 4100 should relieve some selling pressure.

-- Trading back below 4100 could attract more selling, the next potential support is double-bottom support at September 2015 swing low around 4040

NQ Guideline For Friday

With the equity market ready to crash again soon after the open on Thursday the Fed went into panic mode, hinted QE4 and triggered one of the biggest non-stop buy program ever, pushed price up all day.

 

Whether or not we can get a follow-through buying on Friday would depends on whether or not the Fed will come back with another rounds of buy programs. If they do, we should see either another up day or a sideways consolidations.

 

Key price level for NQ on Friday will be around 4260

-- If NQ can stay above 4260 then sellers will be kept at bay, but NQ would need to trade above 4300 to trigger another rounds of Fed-led short-covering rally.

-- Seller will be back below 4260. If so next support is at 4200.

 

Key market driver would remains the price of crude oil. As long as the price of crude oil can stay above $30 the equity market should stabilize a bit. 

NQ Guideline For Thursday

The market sold off hard on Wednesday clearly indicating the market is in crash mode. But with the market participants clearly in capitulation mode the market should find some support soon and then bounce to relieve the extremely oversold condition.

 

However, if that does not happen buyer anticipating a bounce could again bail resulting in a acceleration is the stock market crash.

 

Key price level for NQ in Thursday will be 4210 resistance and 4170 support.

-- Above 4210 selling pressure should be subdued, first resistance above is 4260

-- Selling pressure should resume below 4210, but major algo selling should hit the market below 4170. If so, the next downside target is at 4100, but 4100 could easily be exceeded if selling momentum accelerates.

 

NQ Guideline For Wednesday

Monday nigh buying binge by the Fed managed to cause a gap-up opening for the major equity indices, including NQ, on Tuesday. As the oil price rally started to fade soon after the open it dragged down the equity market. The market sold off hard most of the day but buy programs managed to push the market up in late afternoon trading.

 

With President Obama addressing the country for his state of the union address on Tuesday night it is very likely buy programs is going into overdrive on Tuesday nigh and into Wednesday. If so, look for another up day for the market on Wednesday. However, a selloff day on Wednesday is an indication the market is in crash mode. If so, the downside target remains at 4100.

 

Key inflection price level for NQ on Wednesday will be 4300.

-- NQ will come under heavy selling pressure below 4300, but it needs to break below 4260 Tuesday swing low to trigger massive algo selling programs.

-- Selling pressure will be muted above 4300.

 

Key trend drive remains the price of crude oil.

NQ Guideline For Tuesday

The equity market continued to collapse along with the crude oil price collapse on Monday. Finally, with the markets deep in oversold territory, the panic Fed were finally able to push the market up at the end of the day on Monday.

 

Whether or not they are able to hold the equity market up on Tuesday will depends on the price of crude oil, and for NQ, where it would trade in relation to its key price level.

For NQ key price level for Tuesday will be around 4300.

-- Trading above 4300 will relieve some selling pressure and may cause more short-covering rally, with the next resistance at 4350.

-- Trading below 4300 is bearish and implies a re-test of Monday low. But NQ would need to break below 4200 to trigger another round of margin selling, the next potential support is still at 2100.

NQ Guideline For Monday

The equity market continued to decline on Friday with some profit-taking rally during midday but then the bear market resumed in the afternoon.

 

Although the market was already in oversold territory on Friday, the intensity of the current selling pressure, likely due to margin selling, is still in acceleration mode as of Friday, so whether or not we would get a consolidation day on Monday it is difficult to say, and it will depends on several factors, first is the price of crude oil and then second where NQ trades in relation its key price level.

 

For Monday key price level for NQ is 4300.

-- NQ needs to break back above 4300 and stay above 4300, in conjunction with rally in the price of crude oil, to relieve selling pressure. If so, resistances are 4330 and then 4350.

-- NQ will remains under heavy selling pressure below 4300. A continual push lower could accelerate the margin call selling and can get the market into disorderly decline. A bearish crude oil price will drag the equity market downward. The next potential support level for NQ is still at 4100.

NQ Guideline For Friday

Another selloff day in the market on Thursday. NQ opened with a huge gap-down of over 100 points. Then after a brief countertrend rally, sold off all day into the close.

 

The selloff in the market is far from over, but with a potential end of the week profit-taking by the short seller and a very oversold market condition on the daily chart, a one or two day bounce is possible.

 

However, in order to do that NQ needs to stay above 4330 on Friday then break above 4400 along with rally in the crude oil market. A continual selloffs in the crude oil market will drag the market down.

 

Trading below 4300 is likely to trigger another round of algo sell programs, with the next downside target remains at 4100. 

NQ Guideline For Thursday

A huge opening gap-down for the equity markets on Wednesday with NQ opening down below the crucial 200-day moving average on the daily chart.

 

Buy programs managed to rally NQ back up to re-test the broken 200-DMA from below. However, unless NQ can clearly break-back above its 200-DMA now at around 4460 NQ is in a freefall mode.

 

Following another day of Chinese stock market crash on Thursday trading NQ is now trading over 50 points down during evening globex trading. If the bearish sentiment continue into the open on Thursday and stays below the 200-DMA, look for sellers to sell the market hard.

 

Potential support remains at 4100.

NQ Guideline For Wednesday

Following a huge down day on Monday, NQ traded sideways in a consolidation pattern on Tuesday. NQ could go either way on Wednesday, either continuing to consolidate for another day or resume the downtrend, and the direction of the move will be based on where NQ trades in relation to key price level.

 

Key price level for NQ on Wednesday will be Monday swing low at 4430, and 4430 area is the 200-DMA for NQ on the daily chart, a strong support zone.

-- A clear break could unleash an avalanche of algo sell programs. The next major support for NQ will be 4100. Whether or not NQ can drop down there in one day it is impossible to predict.

-- Trading above 4430 will keep selling pressure in check. Resistance are at 4500, 4580 and 4600.

NQ Guideline For Tuiesday

Following China's stock market crash on Monday the US equities sold off hard during Sunday night trading and opened with a huge gap-down. NQ opened down over 100 points on Monday and then sold off hard, only to be partially rescued by massive Fed buy programs near the close.

 

The rally should be short-lived unless of course the Fed is willing to spend unlimited amount of money to buy all the stocks just like they are doing in the bond market. But printing unlimited amount of money to support the market could risk collapsing the dollar, a delicate balancing act indeed.

 

Both the S&P 500 and Dow Futures have broken below their respective 200-DMA, thus in order to at least temporarily stall selling avalanche both has to re-break back above their 200-DMA. Failure to do so should intensify selling pressure and can easily drag NQ down below its 200-DMA.

 

Leading indicator is now indicating that recession in the US is imminent, if not already in recession.