Stock Market

NAS/QQQ Weekend Levels (July 5-8) for CME_MINI:NQ1! by WadeYendall

The Nasdaq has started to form a falling wedge pattern with price stuck just below the key structural level of 11700. This level has seen many touches over the previous weeks and I see it as a line the sand. I will be leaning bullish above 11700 and bearish below.. The market is oversold and due for another bounce but sentiment remains weak an many traders are expecting another leg lower. Here’s a quick summary of the current environment.

• Current long term bias is BEARISH ==> Neutral

PCE came out last Wednesday and was lower month over month hinting at peak inflation

• Yields have pulled back with 10 year yield below 3%

• Positive inflation news is offset with fears immerging about recession

• MU reported earnings and lowered guidance significantly pointing to slowing economy.

• Fed caught between need to raise rates, so they have more ammunition to fight a recession and creating a recession

• At extreme lows on all sentiment readings. Most market participants are sitting in cash or net short.

• Choppy price action last week going into the end of the month and the July 4th long weekend.

• Starting new month may bring inflows.

• Deeply oversold but many participants still expecting another leg down.

• Market vulnerable to another event shock as governments & Fed out of tools/money to react.

• Possible outlier events = invasion of Taiwan & complete oil cut off by Russia to Europe.

• 2020 peak may still be a magnet for price.

• More data on tap including FOMC minutes and Non Farm Payrolls

WEEKLY EVENTS

Monday US Market Closed

Tuesday US Factory Order & Durable goods

Wednesday US ISM Manufacturing, JOLTS & FOMC minutes

Thursday US International Trade, US Jobless Claims & EIA Crude

Friday Non Farm Payrolls & US Average Earnings

NOTABLE EARNINGS

Monday Market Closed

Tuesday N/A

Wednesday N/A

Thursday HELE , LEVI , PSMT , WDFC

Friday N/A

BULLISH NOTES

Oversold conditions

Extreme bearish sentiment = Contrarian indicator

Strong bear market rally always possible

XLY / XLP ratio showing slight divergence

Growth/Value ration showing slight divergence.

Bond yields have pulled back

BEARISH NOTES

High outlier event risk ie Taiwan invasion

Negative reaction to Fed minutes possible

Weak Manufacturing data possible

Increase in oil prices

Increased social unrest due to inflation

Bond yield pulling back suggest possible recession.

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