Following the announcement of a tentative debt ceiling agreement over the weekend, we saw Memorial Day futures trading pump up a substantial candle.
However, today’s session was able to mostly eradicate the Memorial Day gains. Fighting between Friday’s point of control and a significant trading zone on the holiday was the theme of today, though bears did a good job keeping the battle on the lower price end.
Futures Analysis
/NQ
On the Nasdaq Daily, we can see how the two candles compared. The trading range extended beyond Memorial Day’s candle in both directions, testing highs in the morning before bears took over to push prices down to the Friday point of control.
At the 15-minute level, we can get more insight into the day. A resistance test failed to break out and bears took over to fill the gap, suggesting there might be an exhaustion gap. Today’s significant volume may support the bear thesis, with falling volume with the downtrend indicating a bearish outlook. With trading testing Friday’s key zone and closing at the bottom of the Memorial Day zone, A retest of POC is a possible scenario though a meaningful breakout is doubtful.
For the bull case, it’s the same: news. $AI has earnings tomorrow, and with the current Greater Fool hype, a decent earnings report could be a catalyst to retest resistance. Depending on how tomorrow shapes up, we could be seeing an ascending symmetric triangle pattern with a break up coinciding with the report. However, a negative report with mediocre guidance could also solidify a top, so an $AI straddle earnings play may be a good move, depending on how premiums shape up.
Index Analysis
QQQ
Since this was a holiday weekend, QQQ did not trade, instead beginning with a straight gap up to coincide with futures at open.
As we see on the daily, the two price levels on QQQ were also hit. If QQQ breaks below 348.54, a fall back into the trendline is in the cards, with a 337.07 price target in the coming days. However, if QQ is able to break back up and through 353.8, 361.16 is on the cards. This is the last general area of contention on QQQ levels, so breaking through this region can lead to a quick ascent to retesting ATHs.
How this week shapes up will be important in determining if we get some pullback in the outperforming tech sector. The current rate of growth should be unsustainable, but the past few weeks have had some extremely bullish momentum, so the rally may just continue up without a significant retrace.