NQ - Bearish Divergence (short term pullback imminent?)

20 thg 7, 2023

A bearish divergence can be seen on both the SPX and Nasdaq (with similar divergences also seen on most of the FAANGT stocks), coupled with the fact the indices are now in the overbought territory, a pullback in the near future could be likely.

We saw both NFLX and TSLA sold off after hours despite strong earnings announcements. The market has been running into earning season and a correction would not be too surprising even if earnings are good ("buy" on expectations and sell on "news").

That said, divergences on the daily chart usually predicts a short term reversal (lasting several candles on the average) and not a predictor of a bigger trend change (unless seen on larger time frames like the weekly, if not monthly).

The market remains in uptrend with good support around 15100 - 15300 region. This is an area comprising:
1. a horizontal resistence turned support
2. the 50% to 61.8% fibonacci retracement of the recent AB swing
3. gap fills @ 15300 and also 15120

However, be wary should it break the support @ 15100. So let's see what happens.

Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is (probably the most) important! Take care and Good Luck!

7 thg 8, 2023

Ghi chú

The current pullback is probably freaking many bulls, but despite the current pullback in the Nasdaq (and S&P500), it's probably not time to throw out the baby with the bath water especially when it has not breached the 15100 support. But some housekeeping now and then might be prudent especially for stocks that have started to perform poorly.

Fitch's downgrade of the US credit and also Nasdaq's plan to rebalance the dominance of the "Magnificant Seven" stocks had no doubt added to the recent volatility.

Amidst all the noise, potential bullish divergences are now manifesting on the Nasdaq (and the S&P), hence we might see some bounce soon (although I need to reiterate that any bounce from divergence is only for short term lasting several candles and does not predict a longer term trend change). I will also not be too surprised that the indices could consolidate (hopefully sideways and not much further down) for a while more.

Let's see what happens.

Disclaimer: Just my 2 cents and not a trade advice. Kindly do your own due diligence and trade according to your own risk tolerance and don't forget that money management is (probably the most) important! Take care and Good Luck!

11 thg 8, 2023

Ghi chú

The Nasdaq100 is now sitting at a possibly strong support (around 15100). However we are not see any strength yet. A bullish divergence and falling wedge formation may still give rise to a breakup in the near future. However, we are at the juncture where things can also turn sour quickly and the correction could last longer. Let's see what happens today, and tighten stops on weaker stocks if necessary. Stay safe.