At the moment, we are in a period of time where some key pieces of news hold sway over large directional moves in the markets. For example, bullish news on the debt ceiling talks propelling a move to the upside last week, and yesterday, the S&P 500’s $500 billion swing in market cap following an AI-generated image, cast a light on the underlying instability of the recent, unstoppable bull run.
Futures Analysis
From the daily chart, we can see that the pullback began to take effect today, forming a potential top at the end of today’s session. Today, we broke just below the 13946 supply level’s 13850-14050 area of control from 2 years.
Since we have seen a very strong upwards resistance trendline that has been touched and rejected again, I see a case for falling to the first support line around the 13650 area. From a technical perspective, a retrace seems to be reasonable over the course of a couple of weeks.
However, on the bull case, we are currently in a market where bullish news lights up the market, while bearish news has generally had little effect on the markets. From a catalyst standpoint, we will be bombarded with constant major news, simply due to the media focusing on intraday updates on the debt ceiling talks. If this pattern continues, it may be able to eke out enough momentum to push back up. If we break above 13750, I could see a retest back at 13946, followed by a next leg up.
On a more micro level, today’s session formed two major zones, one in the 13850 area and another at the end of the day around 13750. From the time of writing, postmarket appears to suggest a rejection off demand and a break back up, but that should be taken with a grain of salt.
QQQ Analysis
$QQQ is a Nasdaq ETF. Personally, I primarily trade the Q’s—$TQQQ and $SQQQ, the triple leveraged and inverse triple leveraged counterparts to $QQQ, respectively. Essentially, $TQQQ increases by about 3% for each percentage increase and $SQQQ decreases 3% for each percentage increase in $QQQ. I do so for a few reasons: to be able to trade tech as a sector, the ability to “short” without margin (buying the inverse ETF), and to increase volatility and therefore returns without having to deal with options chains or other derivatives, though I’m looking to change that in the future.
Since the futures and $QQQ both track the same index, the price action will generally look similar.
On the daily, we can see a similar picture, with a clean rejection off the 337 price level, and above the 325 level. However, volume has had a nicer downtrend with the rising prices the past month, which may be indicative of this being a true reversal. Depending on the coming days, I’m looking for a rejection off the first support to indicate a 337 retest, or a break out of the wedge to signal a target towards the second support, at a 330 price level.
Fibonacci Retracements tell a similar story, with levels at 332 and 349 as targets on the macro. In the near term, I’m looking for a retest of the 332-330 levels, before determining any future directions.