US Stock Markets – Following Price One Page At A Time to Understand The Full Story

The same is true of the market, as each day is like the reading of another page. The pages of a book make up chapters. These chapters in trading represent bull markets, bear markets, distribution and accumulation, and time frames of high and low volatility.

Unfortunately, in trading, we cannot skip to the end of the book to learn how everything turns out. However, as traders, we have learned that studying and remembering the past can pay great dividends.

Trading price in its rawest form is simply plotting and studying price without the use of moving averages, stochastics, RSI, or other technical indicators. This simplified but often overlooked methodology can offer everything a trader needs to be successful.

NASDAQ 100 Lower Lows & Lower High

QQQ – The Nasdaq 100 ETF has been making lower lows and lower highs. A longer-term analysis of price is showing us that the 2022 low is lower than the lowest price that the QQQ had traded in 2021. The QQQ in 2021 had a peak to trough range of 26.03%. So far in 2022, the QQQ has had a peak to trough range of 28.71%.

Therefore: Price is showing that QQQ is breaking down and volatility is expanding as it is greater than last year.

QQQ • INVESCO QQQ TRUST ETF • NASDAQ • 4-HOUR

QQQ Trading Price chart

S&P 500 Lower Lows & Lower Highs

SPY – The S&P 500 ETF has been making lower lows and lower highs. The SPY in 2022 has had a peak to trough range of 18.74%.

Therefore: Price is showing us SPY is breaking down and it appears to have put in a major top with confirmation being a new swing low.

SPY • SPDR S&P 500 ETR TRUST • ARCA • 4-HOUR

SPY Trading Price Chart

DOW 30 Lower Lows & Lower Highs

DIA – The Dow Jones Industrials 30 ETF has been making lower lows and lower highs. The DIA in 2022 has had a peak to trough range of 15.02%.

Therefore: Price is showing us DIA is breaking down and appears to have put in a major top with confirmation being a new swing low.

Note: the DIA is doing better than the QQQ or SPY as money flow is rotating out of previously high-performing stocks and seeking safety in blue-chip lower performing stocks.

DIA • SPDR DOW JONES INDUSTRIAL AVERAGE ETF •ARCA • 4-HOUR

DIA Trading Price chart

US Dollar Higher Highs & Higher Lows

UUP – The US Dollar ETF has been making higher highs and higher lows. The UUP in 2022 has had a peak to trough range of 10.43%. UUP has also taken out the highest high that it made in 2021.

Therefore: The price is showing us UUP has broken out to the upside and is in a bull market with confirmation being a new swing high.

According to the 2019 Triennial Central Bank Survey conducted every three years by the Bank of International Settlements: trading in FX markets reached $6.6 trillion per day in April 2019. The BIS report further noted the USD is associated with 88% of all trades, which is $5.8+ trillion in USD daily transactional volume.

The US Dollar continues to attract capital from investors all over the world. But this may prove to be a double-edged sword for US stocks. As capital flocks to the USD, this, in turn, hurts US multinationals as they need to convert their weak foreign currency profits back into USD.

The USD safe-haven trade may eventually trigger a broad and deep selloff in US stocks. As the USD continues to strengthen, corporate profits for US multinationals will shrink or disappear.

UUP • INVESCO DB USD INDEX BULLISH FUND ETF • ARCA • 4-HOUR

UUP Trading Price Chart

Learn From Our Team of Seasoned Traders

In today’s market environment, it’s imperative to assess your trading plan, portfolio holdings, and cash reserves. Experienced traders know what their downside risk is and adapt as necessary. Successful traders manage risk by utilizing stop-loss orders, rebalancing existing positions, reducing portfolio holdings, liquidating investments, and moving into cash.

Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:

  • A loss of 10% requires an 11% gain to recover
  • A 50% loss requires a 100% gain to recover
  • A 60% loss requires an even more daunting 150% gain to simply return to break even.

Recovery time also varies significantly depending upon the magnitude of the drawdown. A 10% drawdown can typically be recovered in weeks or a few months, while a 50% drawdown may take several years to recover.

Depending on a trader’s age, they may not have the time to wait on the recovery or the patience. Therefore, successful traders know it’s critical to keep their drawdowns within reason, as most of them learned this principle the hard way.

At TheTechnicalTraders.com, my team and I can do these things:

  • Reduce your FOMO and manage your emotions.
  • Have proven trading strategies for bull and bear markets.
  • Provide quality trades for investing conservatively.
  • Tell you when to take profits and exit trades.
  • Save you time with our research.
  • Provide above-average returns/growth over the long run.
  • Have consistent growth with low volatility/risks.
  • Make trading and investing safer, more profitable, and educational.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

Market Volatility – Traders Must Adapt Or Risk Losing Their Shirts

Global money is continuing to flow into the US Dollar making it one of the primary safe-haven trades.  This may eventually trigger a broader and deeper selloff in U.S. stocks. As the USD continues to strengthen corporate profits for US multinationals will begin to disappear.

It’s imperative to assess your trading plan, portfolio holdings, and cash resources. Experienced traders know what their downside risk is and adapt as needed to the current market environment.

If you still have money invested in Amazon, Netflix, PayPal, or one of the many other stocks that are sinking fast there is no easy way out. Your options are:

  1. Hold tight and “hope” for a rally to recover part of your money.
  2. Reduce some of your position to “limit your downside” in case the bottom really falls out, and then sell the balance after a bounce of 5-8%.
  3. Move to cash, “bite the bullet”, get a good night’s sleep, take a break, reassess, and live to come back and trade another day.

NASDAQ Enters Bear Market Territory

The NASDAQ peaked at around 3.1618% of its Covid 2020 high-low range the week of November 21, 2021.

  • THEN – the QQQ ETF’s first swing down was -21% over a 16-week period (4 months).
  • THEN – a brief 3-week rally, retraced around 61.8%.
  • THEN – resumed its downtrend by taking out its previous low.

THEREFORE – according to the -20% Bear Market Rule: QQQ – 23.32% from its peak and -21.27% YTD is in a bear market.

QQQ • Invesco QQQ ETF Trust • NASDAQ • Weekly

market volatility - QQQ chart

AMAZON Breaking Down -35%

Amazon AMZN peaked at around 3.1618% of its Covid 2020 high-low range the week of July 12, 2021.

  • THEN – AMZN made a double top the week of November 15, 2021.
  • THEN – the first swing down was -28.91% over a 16-week period (4 months).
  • THEN – after a brief 4-week rally, retraced a little more than 61.8% of its initial downswing.
  • THEN – resumed its downtrend by taking out its previous low.

THEREFORE – according to the -20% Bear Market Rule: AMZN -35.74% from its peak and -25.39% YTD is in a bear market.

AMZN • AMAZON.COM, INC. • NASDAQ • Weekly

market volatility - amazon chart

Netflix Plummets -72% In 5 Months

Netflix NFLX peaked at around 2.382% of its Covid 2020 high-low range the week of November 15, 2021.

  • THEN – NFLX’s first swing down was -17% over a 5-week period.
  • THEN – a brief 3-week rally, NFLX retraced only 25%.
  • THEN – the second swing down was -43% over a 4-week period.
  • THEN – only less than a 2-week rally retraced around 33%.
  • THEN – resumed its downtrend by taking out its previous low.

THEREFORE – according to the -20% Bear Market Rule: NFLX – 72% from its peak and -68.40% YTD is most definitely in a bear market.

NFLX • NETFLIX, INC. • NASDAQ • Weekly

market volatility - netflix chart

PAYPAL Drops -73% In 9 Months

PayPal PYPL peaked at around 5.1618% of its Covid 2020 high-low range the week of February 16, 2021.

  • THEN – PYPL put in a double top the week of July 26, 2021.
  • THEN – the first swing down was -14% over a 4-week period.
  • THEN – a brief 4-week rally, retraced about 61.8%.
  • THEN – the second swing down was -39% over a 14-week period (3.5 months).
  • THEN – a 6-week sideways rally retraced only around 10%.
  • THEN – resumed its downtrend by taking out its previous low.

THEREFORE – according to the -20% Bear Market Rule: PYPL – 73% from its peak and -53.39% YTD is most definitely in a bear market.

PYPL • Paypal Holdings, Inc. • NASDAQ • Weekly

market volatility - paypal chart

Drawdowns Have a Critical Impact

We need to remember the larger the loss the more difficult it is to make up. A loss of 10% requires an 11% gain to recover, however, a 50% loss requires a 100% gain to recover, and a 60% loss requires an even more daunting 150% gain to simply return to break even.

Recovery time also varies significantly depending upon the magnitude of the drawdown. A 10% drawdown can typically be recovered in weeks or a few months while a 50% drawdown may take several years to recover. Depending on a trader’s age they may not have the time to wait on the recovery nor the patience. Therefore, successful traders know it’s critical to keep their drawdowns within reason as most of them this principle the hard way!

Prepare yourself for Market Volatility

Especially in times like these, traders must understand where opportunities are and how to turn this knowledge into profits. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list. Our core objective is to protect our valuable capital while identifying suitable risk vs reward opportunities for profits in new and emerging trends.

What Strategies Can Help You Navigate the Current Market Trends?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

Historically, bonds have served as one of these safe-havens, but that is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there and how can they be deployed in a bond replacement strategy?

We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

E-mini NASDAQ-100: Testing Short-Term Retracement Zone

June E-mini NASDAQ-100 Index futures are inching higher early Tuesday after posting a potentially bullish closing price reversal bottom the previous session. The chart pattern reflects a divergence with the cash market NASDAQ Composite which finished lower.

After Monday’s session saw all three benchmarks slip between positive and negative territory, the index is moving slightly higher, but the buying is a little tentative with investors monitoring surging bond yields ahead of further earnings cues this week.

At 03:20 GMT, June E-mini NASDAQ-100 Index futures are trading 13976.75, up 69.00 or +0.50%. On Monday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $338.96, up $0.53 or +0.16%.

Monday Recap

Twitter rose 7.5% as the micro-blogging site adopted a “poison pill” on Friday to restrict Tesla CEO Elon Musk from raising his stake to beyond 15% for a one-year period. Tesla rose 2% as it prepares to reopen its Shanghai plant following a near three-week COVID shutdown.

Looking Ahead …

Market participants are bracing for a barrage of earnings that will help them assess the impact of the Ukraine war and a spike in inflation on company financials. Netflix, Tesla and International Business Machines are all to report this week.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher following the confirmation of Monday’s closing price reversal bottom.

A trade through 15198.00 will change the main trend to up. A move through 13729.50 will negate the closing price reversal top and signal a resumption of the downtrend.

The minor trend is also down. A trade through 14296.25 will change the minor trend to up. This will confirm the shift in momentum.

The short-term range is 12942.50 to 15268.75. The index is currently testing its retracement zone at 14105.75 to 13831.00.

The minor range is 15198.00 to 13729.50. If the minor trend changes to up then its pivot at 14539.75 will become the next target.

The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is the strongest resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index on Tuesday is likely to be determined by trader reaction to 13831.00.

Bullish Scenario

A sustained move over 13831.25 will indicate the presence of buyers. The first upside target is a 50% level at 14105.75. Overtaking this level could drive the index into the minor top at 14296.25.

Taking out 14296.25 will change the minor trend to up and could trigger a further rally into the pivot at 14539.75.

Bearish Scenario

A sustained move under 13831.25 will signal the presence of sellers. The first target is the minor bottom at 13729.50. This is a potential trigger point for an acceleration to the downside with the next major target coming in at 12942.50.

For a look at all of today’s economic events, check out our economic calendar.

Major Indexes Continue To Be Outperformed By Energy & Metals

ETFs like XOP (S&P Oil & Gas Exploration & Production), XME (S&P Metals & Mining), and XLU (Utilities) have been experiencing capital inflows. At the same time, other ETFs such as DIA (30-Industrials), SPY (500-Large Caps), IWM (2000-Small Caps), IYT (Transports), and QQQ (100-Nasdaq Largest Non-Financial) are still in the red for the year.

Our positions in energy and precious metal ETFs netted us a positive return, while our recent trades in the major stock index ETFs had already booked partial position profits, with the remainder of the positions stopping out for a small break-even profit.

As we experience record inflation numbers reported and central banks raising their lending rates, we are keeping our cash ready and closely monitoring key ETF sectors as compared to the major stock index benchmarks for clues regarding our location within the overall economic cycle.

SPY – SPDR S&P 500 ETF TRUST – DAILY SECTOR COMPARISON CHART

Major Indexes SPY

TheTechnicalTraders – TradingView

TACTICAL ETFs FOR ALTERNATIVE STRATEGIES

From time to time, we get questions from our subscribers regarding inverse and leveraged ETFs. Inverse and/or leveraged ETFs are not appropriate for everyone. However, for some experienced traders, these tactical ETFs can provide alternative strategies for use in a bear market.

An inverse ETF is an exchange-traded fund (ETF) constructed by using various derivatives to profit from a decline in the value of an underlying benchmark. Inverse ETFs allow investors to make money when the market or the underlying index declines, but without having to sell anything short.

A leveraged exchange-traded fund (ETF) is a marketable security that uses financial derivatives and debt to amplify the returns of an underlying index. While a traditional exchange-traded fund typically tracks the securities in its underlying index on a 1:1 basis, a leverage ETF may be structured for a 2:1 or even a 3:1 ratio.

These ETFs listed below track the underlying S&P 500 benchmark that represents 500 US large caps as selected by S&P’s Index Committee. These ETFs are examples of both inverse and leveraged ETFs:

  • SPY vs. SH (1:1 or 1x leverage) – SPY (Bull) is the most recognized ETF and is typically listed in the top ETFs for the largest AUM and greatest trading volume. SH (Bear) provides 1:1 inverse exposure to the S&P 500.
  • SSO vs. SDS (2:1 or 2x leverage) – SSO (Bull) seeks a daily 2x return of the S&P 500. SDS (Bear) provides 2:1 inverse exposure to the S&P 500.
  • UPRO vs. SPXU (3:1 or 3x leverage) – UPRO (Bull) seeks a daily 3x return of the S&P 500. SPXU (Bear provides 3:1 inverse exposure to the S&P 500.

SPY – SPDR S&P 500 ETF TRUST – DAILY S&P 500 COMPARISON CHART

The following chart gives us a visual of how the ETFs mentioned above are performing against each other over the past 15-months. It should be noted that inverse ETFs carry unique risks that traders should be aware of before participating in them. Some of the risks associated with inverse ETFs are compounding risk, derivative securities risk, correlation risk, and short sale exposure risk.

Major Indexes SPY

TheTechnicalTraders – TradingView

KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDED

It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and in the last six trades we entered in March, all have now been closed at a profit! Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.

Successful trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.

WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

Historically, bonds have served as one of these safe-havens, but that is not proving to be the case this time around. So if bonds are off the table, what bond alternatives are there and how can they be deployed in a bond replacement strategy?

We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

 

E-mini NASDAQ-100 May Be Trying to Build Support Base

June E-mini NASDAQ-100 Index futures are inching higher early Wednesday after posting a lower close the previous session in a volatile trade. The market edged lower late in the session on Tuesday, giving back earlier gains as Treasury yields bounced back a little, weighing on technology growth stocks.

Tech-driven stocks rose shortly after the cash market opening, driven by inline economic data and a dip in benchmark Treasury yields from their highest point in nearly three years.

At 04:51 GMT, June E-mini NASDAQ-100 Index futures are trading 14027.25, up 82.25 or +0.59%. On Tuesday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $339.53, down $1.36 or -0.40%.

In economic news, the Labor Department’s CPI report showed the prices urban American consumers pay for a basket of goods posted the biggest monthly jump since September 2005, and an annual surge of 8.5%, the hottest year-on-year inflation number in more than four decades.

The report did little to budge the needle of expectations regarding impending interest rate hikes from the Federal Reserve.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 13881.25 will signal a resumption of the downtrend. A move through 15198.00 will change the main trend to up.

The minor trend is also down. A trade through 14642.25 will change the minor trend to up. This will also shift momentum.

The short-term retracement zone is 12942.50 to 15268.75. The index is currently testing its retracement zone at 14105.75 to 13831.00. Trader reaction to this area should determine the near-term direction of the market.

The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is the major resistance.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index early Wednesday is likely to be determined by trader reaction to 14082.75.

Bullish Scenario

A sustained move over 14082.75 will indicate the presence of buyers. The first upside target is the short-term 50% level at 14105.75. Overtaking this level will indicate the buying is getting stronger with a minor pivot at 14261.75 the next target. This is followed by another minor pivot at 14539.75.

Bearish Scenario

A sustained move under 14082.75 will signal the presence of sellers. The first downside target is yesterday’s low at 13831.00, followed by the short-term Fibonacci level at 13831.00. This is a potential trigger point for an acceleration to the downside with 12942.50 the next major target.

For a look at all of today’s economic events, check out our economic calendar.

June E-mini NASDAQ-100 Sellers Targeting 14105.50 – 13831.00

June E-mini NASDAQ-100 Index futures finished lower on Friday, wiping out the previous day’s gains as technology companies fell out of favor again due to the threat of aggressive rate hikes by the U.S. Federal Reserve. Traders also expressed concerns over a possible recession due to the Fed’s moves. The on-going war in Ukraine also weighed on sentiment.

On Friday, June E-mini NASDAQ-100 Index futures settled at 14327.00 down 209.00 or -1.46%. The Invesco QQQ Trust Series 1 ETF (QQQ) finished at $349.11, down $4.99 or -1.41%.

Shares of Tesla Inc, Nvidia Corp and Alphabet Inc fell between 1.9% and 4.5% as megacap stocks extended last week’s decline as the surge in Treasury yields weighed.

The 10-year rate hit a fresh 3-year high on Friday as investors continued to digest minutes from the previous Fed meeting.

The yield on the benchmark 10-year Treasury note traded above 2.7% on Friday, near its highest level since March 2019 as it continues its jump following recent comments from the Fed.

Meanwhile, expectations of an aggressive Fed tightening of monetary policy, along with rising inflation, has caused yields to invert. Investors have been selling out of shorter-dated Treasurys in favor of long-dated government debt, indicating concerns about the near-term health of the economy, with fears of a recession on the rise.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 15198.00 will change the main trend to up. The nearest main bottom is 12942.50.

The minor trend is also down. A trade through 14642.25 will change the minor trend to up. This will shift the momentum.

The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is resistance. It is controlling the near-term direction of the index.

The short-term range is 12942.50 to 15268.75. Its retracement zone at 14105.50 to 13831.00 is the nearest downside target. Aggressive counter-trend buyers could come in on a test of this area. They will be trying to form a secondary higher bottom.

Short-Term Outlook

The direction of the June E-mini NASDAQ-100 Index early Monday is likely to be determined by trader reaction to 14476.50.

Bearish Scenario

A sustained move under 14476.25 will signal the presence of sellers. Taking out 14310.50 will indicate the selling pressure is getting stronger. This could lead to a quick test of 14105.50 to 13831.00.

Look for a technical bounce on the first test of 14105.50 to 13831.00. If it fails to hold, however, then look for an acceleration to the downside with 14242.50 the next major target.

Bullish Scenario

A sustained move over 14476.75 will signal the presence of buyers. Taking out 14642.25 will indicate the buying is getting stronger. This could trigger a quick surge into 14821.25.

Since the main trend is down, look for sellers on the first test of 14821.25. Overcoming it, however, could trigger an acceleration into the main top at 15198.00, followed by the Fibonacci level at 15264.75.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ Settles on Weak Side of Main Retracement Zone

June E-mini NASDAQ-100 Index futures fell sharply on Wednesday as technology stocks extended their sell-off for a second straight day on mounting concerns over aggressive actions by the Federal Reserve to fight inflation, following the release of the minutes from the March monetary policy meeting.

On Wednesday, the June E-mini NASDAQ-100 Index settled at 14505.25, down 322.75 or -2.23%. The Invesco QQQ Trust Series 1 ETF (QQQ) finished at $353.17, down $7.93 or -2.20%.

According to minutes of the March 15-16 policy meeting, Fed officials “generally agreed” to cut up to $95 billion a month from the central bank’s asset holdings as another tool in the fight against surging inflation, even as the war in Ukraine tempered the first U.S. interest rate increase.

In stock related news, Tesla Inc, Meta Platforms Inc, Apple Inc, Amazon.com Inc, Alphabet Inc and Microsoft Corp fell between 1.85% and 4.17%.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It turned down on Wednesday when sellers took out the last swing bottom at 14725.00. A trade through 15198 will change the main trend to up.

The main range is 16700 to 12942.50. The index closed on the weak side of its retracement zone at 14821.25 to 15264.75, making it resistance.

The short-term range is 12942.50 to 15268.75. Its retracement zone at 14105.50 to 13831.00 is the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index early Thursday is likely to be determined by trader reaction to 14505.25.

Bearish Scenario

A sustained move under 14505.25 will indicate the presence of sellers. Taking out 14394.75 will indicate the selling pressure is getting stronger with the short-term 50% level at 14105.50 the first downside target. This is followed by the short-term 61.8% level at 13831.00.

Look for aggressive counter-trend buyers on the first test of 14105.50 – 13831.00. They are going to try to form a secondary higher bottom.

Bullish Scenario

A sustained move over 14505.25 will signal the presence of counter-trend buyers. If this move creates enough upside momentum then look for a surge into the main 50% level at 14821.25. Since the main trend is down, look for sellers on the first test of this level.

Overcoming 14821.25 will indicate the short-covering is getting stronger.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar (USD) Is On Our Radar!

For the U.S. consumer, a strong USD means U.S. goods are more expensive in foreign markets. For U.S. companies that buy or sell products/services globally, a strong USD means they are less competitive. A strong dollar is a significant headwind that erodes the profits of U.S. multinationals.

Since we trade and invest in ETFs, it is especially interesting to see how the USD has been trading in 2022 compared to Gold (GLD), the S&P 500 (SPY), and the Nasdaq 100 (QQQ). Gold is the top performer, followed by the Australian dollar (AUD) and the U.S. dollar (DXY). We can also see on the following chart the recent recovery rally in both the SPY and QQQ. Amazingly the QQQ has recovered half of its 2022 loss in just the last few weeks.

DXY – US Dollar Currency Index – Daily Comparison Chart

USD

TheTechnicalTraders – TradingView

U.S. Dollar Vs Major Currencies Performance Mixed

The following chart from finviz shows us that the USD has strengthened vs. the Japanese yen, Eurodollar, British pound, and Switzerland franc. But also that the USD has weakened vs. the Australian dollar, New Zealand dollar, and the Canadian dollar.

The AUD, NZD, and CAD reflect the impact of rising energy and commodity prices. The JPY reflects Japan’s negative interest rate as well as its dovish economic policy. While the EUR, GBP, and CHF are suffering from capital outflows due to the impact of Europe’s Russia Ukraine war.

US Dollar Year to Date Relative Performance vs Majors

USD, AUD

finviz.com

US Dollar Appreciated +11.19%

Since May 25, 2021, the USD has been steadily appreciating as a stand-alone market. We can also see that the USD has been in a bullish upward-sloping channel. The USD has offered many buying opportunities at both its bottom trendline as well as its Fibonacci support levels. It continues to make higher highs and higher lows.

The USD remains attractive as it is the primary reserve currency for government central banks. The FED, with its recent rate hike, has signaled that it is planning on additional increases. The USD is considered a safe-haven investment and benefits from rising energy prices as the U.S. is a major producer of global oil and natural gas.

DXY – US Dollar Currency Index – Daily Chart

USD currency index

TheTechnicalTraders – TradingView

Australian Dollar Gained +45.15%

The Australian dollar enjoyed a strong rally in 2020 as it gained more than +45%. After hitting resistance at its 1.618 Fibonacci extension, the AUD corrected about 38% of its up-swing. This correction ended when buying resumed at the AUD previous high or the 1.000 support level. Since Jan 2022, the AUD has already appreciated about 9%. This is similar in both percentage and time frame to the S&P 500 (SPY) and the Nasdaq 100 (QQQ) equity markets.

AUD/USD – Australian Dolar vs US Dollar – Daily Chart

AUD, USD

TheTechnicalTraders – TradingView

Knowledge, Wisdom, and Application Are Needed

It is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly.

We provide our ETF trades to our subscribers and of the last five trades we entered, three have been closed at a profit! Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

Successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.

What Strategies Can Help You Navigate the Current Market Trends?

Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe.

We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.

We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

 

E-mini NASDAQ-100 Set Up for Breakout Over 15268.75

June E-mini NASDAQ-100 Index futures are soaring shortly before the close on Monday, boosted by megacap stocks and a 20% jump in Twitter shares, even as the global mood remained cautious amid talks of more sanctions against Russia over its invasion of Ukraine.

Reuters reported that micro-blogging site Twitter Inc surged 24.1% to become the best performing stock on the NASDAQ-100 and the benchmark S&P 500 after Tesla Inc Chief Executive Officer Elon Musk reported a 9.2% stake in the company.

At 19:08 GMT, June E-mini NASDAQ-100 Index futures are trading 15133.50, up 269.75 or +1.81%. The Invesco QQQ Trust Series 1 ETF (QQQ) is at $368.54, up $6.69 or +1.85%.

Technology companies including Apple, Amazon, Nvidia and Microsoft were up more than 1%. Shares of Tesla also put in a strong performance, gaining 3% after the electric-vehicle maker reported record deliveries for the first quarter.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 15268.75 will signal a resumption of the uptrend. A move through 12942.50 will change the main trend to down. This is highly unlikely but there is plenty of room for a normal 50% to 61.8% correction of its recent 10-day rally.

The minor trend is also up. A trade through 14725.00 will change the minor trend to down. This will shift momentum to the downside.

The main range is 16700.00 to 12942.50. The index is currently trading inside its retracement zone at 14821.25 to 15264.75. This zone is controlling the near-term direction of the index.

The minor range is 15268.75 to 14725.00. The index is currently trading on the strong side of its pivot at 14996.75, making it support.

The short-term range is 12942.50 to 15268.75. If the minor trend changes to down then look for the correction to possibly extend into its retracement zone at 14105.50 to 13831.00.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index into the close on Monday will be determined by trader reaction to 14997.00.

Bullish Scenario

A sustained move over 14997.00 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the resistance cluster at 15264.75 – 15268.75. Overtaking this area will indicate the buying is getting stronger. This could trigger an acceleration to the upside with 16007.50 the primary target.

Bearish Scenario

A sustained move under 14997.00 will signal the presence of sellers. The first target is 14821.25, followed closely by the minor bottom at 14725.00.

Taking out 14725.00 will shift momentum to the downside and could trigger the start of an acceleration into the short-term retracement zone at 14105.50 to 13831.00.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASD-100 Threatening to Turn Lower for the Week

June E-mini NASDAQ-100 Index futures are trading lower shortly after the mid-session on Friday. The catalysts behind the weakness are the prospect of higher interest rates, a troublesome bond market recession indictor and another drop in chip stocks.

At 17:18 GMT, June E-mini NASDAQ-100 Index futures are trading 14736.50, down 132.25 or -0.89%. The Invesco QQQ Trust Series 1 ETF (QQQ) is at $359.00, down $3.54 or -0.98%.

Investors are digesting the official jobs report for March, which showed the U.S. economy adding 431,000 jobs. The result was below the composite estimate of 490,000 from Dow Jones but above some of the lower end estimates. Nonetheless, the data signaled resilience in the U.S. economy, supporting an aggressive tightening policy by the Federal Reserve.

Stock traders largely shook off a recession signal from the bond market that was triggered after the closing bell Thursday and again on Friday morning. The 2-year and 10-year Treasury yields inverted for the first time since 2019.

However, U.S. Treasury yields jumped and a closely watched part of the yield curve reinverted after the jobs data supported the view that the Fed will need to aggressively hike rates to stem soaring inflation.

Meanwhile on the stock front, Chip stocks fell again on Friday, with Intel dropping more than 4% and Advanced Micro Devices losing 2.3%, amid growing concern about personal computer demand.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 15268.75 will signal a resumption of the uptrend. A move through 12942.50 will change the main trend to down. This is highly unlikely, but there is room for a normal 50% to 61.8% correction of the recent 10-session rally.

The minor trend is also up. A trade through 14433.50 will change the minor trend to down. This will shift the momentum.

The main range is 16700.00 to 12942.50. Earlier in the week, the index found resistance at the top of its retracement zone at 15264.50. Today, it is trading on the weak side of the 50% level at 14821.25.

The short-term range is 12942.50 to 15268.75. Its retracement zone at 14105.40 to 13831.00 is the new downside target.

Daily Swing Chart Technical Forecast

A sustained move under 14821.25 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor bottom at 14433.50.

Overcoming 14821.25 late in the session will put the index in a position to turn higher for the session.

For a look at all of today’s economic events, check out our economic calendar.

E-Mini NASD-100 Struggling Inside 14821.25 – 15264.75

June E-mini NASDAQ-100 Index futures are inching lower early Thursday as investors prepare to wrap up a volatile month and quarter that could end with either a bang or a whimper based on its recent activity.

CNBC is reporting that some tech stocks were under pressure in the pre-market session amid analysts concerns over the PC market going forward. AMD shares slipped more than 1% in the premarket after analysts at Barclays downgraded the stock to equal weight from overweight.

Meanwhile, the HP Inc and Dell dipped 3.8% and 2% respectively after being downgraded to equal weight from overweight at Morgan Stanley.

At 11:44 GMT, June E-mini NASDAQ-100 Index futures are trading 15099.50, up 28.00 or +0.19%. On Wednesday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $367.20, down $3.99 or -1.07%.

In the cash market, the NASDAQ Composite is on pace to finish the month up about 5%. For the quarter, the tech-driven index is off more than 7%.

Later today, investors will get the opportunity to react to the latest data on weekly jobless claims, personal income and personal spending.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 15268.75 will signal a resumption of the uptrend. A move through 12942.50 will change the main trend to down.

The minor trend is also up. A trade through 14433.50 will change the main trend to down. This will also shift momentum to the downside.

The main range is 16700.00 to 12942.50. The index is currently trading inside its retracement zone at 14821.25 to 15264.75. This zone is controlling the near-term direction of the index.

The short-term range is 12942.50 to 15268.75. If the minor trend changes to down then its retracement zone at 14105.50 to 13831.00 will become the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index on Thursday is likely to be determined by trader reaction to 15264.75.

Bullish Scenario

A sustained move over 15264.75 will indicate the presence of buyers. Taking out this week’s high at 15268.75 will indicate if the buying is getting stronger. This could trigger the start of an acceleration into the January 12 main top at 16007.50.

Bearish Scenario

A sustained move under 15264.50 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the main 50% level at 14821.25.

Taking out 14821.25 will indicate the selling pressure is getting stronger with the minor bottom at 14433.50 the next likely target.

For a look at all of today’s economic events, check out our economic calendar.

NASDAQ-100 Bulls Looking to Trigger Breakout Over 15264.75

June E-mini NASDAQ-100 Index futures are trading higher shortly before the cash market opening. Optimism for a Russia-Ukraine ceasefire appeared to help investor sentiment on Tuesday morning.

Traders are reacting positively to reports that Russia promised at the peace talks to drastically scale down its military operations around Kyiv and the northern Ukrainian city of Chernihiv, while Ukraine proposed neutral status with international guarantees to protect it from attack.

At 12:46 GMT, June E-mini NASDAQ-100 Index futures are at 15138.25, up 153.00 or +1.02%. On Monday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $364.99, up $5.64 or +1.57%.

Ukrainian negotiators said they had proposed a status under which their country would not join alliances or host bases of foreign troops, but would have its security guaranteed in terms similar to “Article 5”, the collective defense clause of NATO.

Investors are hoping to feed off of Monday’s strong gains that were led by Tesla. Shares of the electric-car maker jumped 8.03% and was the biggest boost to the NASDAQ after saying it will seek investor approval to increase its number of shares to enable a stock split.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the next main top at 15261.25 will reaffirm the uptrend. A trade through 12942.50 will change the main trend to down.

The main range is 16700.00 to 12942.50. The index is currently trading inside its retracement zone at 14821.25 to 15264.75, and threatening to breakout to the upside.

The short-term range is 15261.25 to 12942.50. Its retracement zone at 14375.50 to 14101.75 is potential support.

Daily Swing Chart Technical Forecast

The strong momentum early in the session has put the June E-mini NASDAQ-100 in a position to breakout to the upside. The direction of the index will be determined by trader reaction to 15261.25 and 15264.75.

Bullish Scenario

A sustained move over 15264.75 will indicate the presence of buyers. If they can generate enough upside momentum then look for a possible acceleration to the upside with the main top at 16007.50 the next major target.

Bearish Scenario

A sustained move under 15261.25 will be a sign of weakness. This could trigger a break into the 50% level at 14821.25. This is a potential trigger point for an acceleration to the downside with the next target area 14375.50 to 14101.75.

For a look at all of today’s economic events, check out our economic calendar.

Major Challenge for E-mini NASDAQ-100 at 14821.25 – 15264.75

June E-mini NASDAQ-100 Index futures closed lower on Friday, diverging from the benchmark S&P 500 and Blue Chip Dow Jones Industrial Average futures which ended higher. Tech and other big growth names mostly declined, but they finished off session lows following a late-session rally. For the week, the NASDAQ Composite registered a gain of 2%.

On Friday, the June E-mini NASDAQ-100 Index futures contract settled at 14755.75, down 8.00 or -0.05%. The Invesco QQQ Trust Series 1 ETF finished at $359.39, down $0.26 or -0.07%.

Technology shares, which are highly sensitive to interest rates, may have been influenced as investors assessed how aggressive the Federal Reserve will be as it tightens policy after Fed Chair Jerome Powell last week said that the central bank needed to move “expeditiously” to combat high inflation and raised the possibility of a 50-basis-point hike in rates in May.

Additionally, U.S. Treasury yields jumped on Friday, with the benchmark 10-year note surging to nearly three-year highs, as the market grappled with high inflation and a Federal Reserve that could easily spark a downturn as it aggressively tightens policy.

In stock related news, Zoom fell 3.2% and DocuSign lost 3.9%, among the NASDAQ’s worst decliners Friday.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The next target is the February 2 main top at 15261.25.

A trade through 12942.50 will change the main trend to down. This is highly unlikely but due to the prolonged move up in terms of price and time, the index will begin Monday’s session inside the “Window of Time” for a potentially bearish closing price reversal top chart pattern.

The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is the primary upside target. Trader reaction to this zone will determine the near-term direction of the market.

The intermediate range is 15261.25 to 12942.50. Its retracement zone at 14375.50 to 14101.75 is the nearest support.

Short-Term Outlook

The direction of the June E-mini NASDAQ-100 Index on Monday is likely to be determined by trader reaction to the main 50% level at 14821.25.

Look for a bullish tone on a sustained move over 14821.25. If this creates enough upside momentum then look for a potential surge into the main 61.8% level at 15264.75.

A bearish bias could begin on a sustained move under 14821.25. If this generates enough downside momentum then look for the selling to extend into the intermediate Fibonacci level at 14375.50. If it fails then look for a break into the intermediate 50% level at 14101.75.

For a look at all of today’s economic events, check out our economic calendar.

Big Test for E-mini NASD-100 Bulls at 14821.25 – 15264.75

June E-mini NASDAQ-100 Index futures are inching higher early Friday after a strong performance the previous session. In the cash market on Thursday, the NASDAQ Composite gained 1.9%, led mostly by a surge in chip stocks. This put the index in a position to post its second-straight winning week.

At 06:59 GMT, June E-mini NASDAQ-100 Index futures are trading 14783.25, up 19.50 or +0.13%. On Thursday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $359.59, up $7.76 or +2.21%.

On Thursday, bargain-hunters snapped up beaten-down shares of chipmakers and big growth names as oil prices retreated.

Nvidia Corp’s stock gained 9.8%, leading a rally across the chip sector and hitting its highest level since mid-January. Intel Corp climbed 6.9%.

The Philadelphia SE semiconductor index jumped 5.1% in its biggest daily percentage gain since February 15, while it remains down about 10% for the year so far. Apple shares rose for an eighth consecutive day after getting hammered earlier this month.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 14814.00 will signal a resumption of the uptrend.

A trade through 12942.50 will change the main trend to down. This is highly unlikely but due to the prolonged move up in terms of price and time, the index begins today’s session inside the window of time for a potentially bearish closing price reversal top.

The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is the primarily upside target. Trader reaction to this area will determine the near-term direction of the index.

The short-term range is 15261.25 to 12942.50. Its retracement zone at 14375.50 to 14101.75 is support.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 Index on Friday is likely to be determined by trader reaction to 14763.75.

Bullish Scenario

A sustained move over 14763.75 will indicate the presence of buyers. Overtaking the main 50% level at 14821.25 will indicate the buying is getting stronger. If this move can generate enough upside momentum then look for the rally to possibly extend into the resistance cluster at 15261.25 to 15264.75.

Bearish Scenario

A sustained move under 14763.75 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the short-term Fibonacci level at 14375.50. Buyers could come in on the first test of this level, but if it fails then look for the selling to possibly extend into the short-term 50% level at 14101.75.

Side Notes

A close below 14763.75 will form a closing price reversal top. If confirmed, this could trigger the start of a minimum 2 to 3 day correction.

Watch the price action and read the order flow on a test of 14821.25 to 15264.75. Aggressive counter-trend traders may show up in an effort to form a potentially bearish secondary lower top.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ-100 Changed Trend, Momentum to Up

June E-mini NASDAQ-100 Index futures are soaring into the close on Wednesday after the cash market Composite put in a stellar performance. Although there was some choppiness after the U.S. Federal Reserve announced a rate increase and several more to follow, the market seemed to absorb the news well.

At 20:34 GMT, June E-mini NASDAQ-100 Index futures are trading 13996.25, up 546.75 or +4.07%. The Invesco QQQ Trust Series 1 ETF (QQQ) settled at $340.39, up $12.24 or +3.73%.

The U.S. central bank brought its pandemic-era easy monetary policy to an end Wednesday afternoon after it announced a quarter-percentage-point increase in its benchmark overnight rate as was widely expected. However, it was the projection that its rate would hit between 1.75% and 2% by year’s end that appeared to rattle investors.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 13858.00 change the main trend to up earlier in the session. A trade through 12942.50 will change the main trend to down.

The nearest support is a minor pivot at 13803.75.

On the upside, short-term resistance could come in on a test of the retracement zone at 14102.00 to 14375.50. This is followed by the main retracement zone at 14857.75 to 15292.50.

Inside the two retracement zones are main tops at 14389.00 and 14665.00.

Daily Swing Chart Technical Forecast

The change in trend to up and the close near the high of the session indicates we’re likely to see a higher opening on Thursday and a follow-through to the upside.

Sellers could attempt to stop the rally on a test of 14102.00 to 14375.50, but a breakout over 14389.00 could trigger an acceleration to the upside with the next major target coming in at 14857.75 to 15292.50.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ-100 in Position to Form Reversal Bottom

June E-mini NASDAQ-100 Index futures are trading higher late in the session on Tuesday as traders reacted to lower oil prices and hopes of peace between Ukraine and Russia. The price action also suggests that investors have already priced in a 25-basis point rate hike by the Fed on Wednesday although they still aren’t sure how aggressive the central bank will be this year in combating rising inflation.

At 18:42 GMT, June E-mini NASDAQ-100 Index futures are trading 13329.50, up 285.50 or +2.19%. The Invesco QQQ Trust Series 1 ETF (QQQ) is at $324.94, up $6.77 or +2.13%.

Tech stocks are leading the bounce after recent losses. Index components Microsoft and Netflix rose more than 2% after Wall Street analysts reiterated their overweight ratings. Apple and Meta Platforms gained more than 1%. Oracle climbed 5%.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 13858.00 will change the main trend to up. A move through the intraday low at 12942.50 will signal a resumption of the downtrend.

The minor range is 13858.00 to 12942.50. Its pivot at 13400.25 is intraday resistance.

Additional resistance is a series of potential resistance levels at 13665.75, 13803.75 and 14102.00.

Short-Term Outlook

During the pre-market session, the June E-mini NASDAQ-100 Index took out the May 12, 2021 main bottom at 12957.25. The selling pressure came to a halt at 12942.50, however. This triggered a strong short-covering rally.

The subsequent intraday rally turned the index higher for the session. A close over 13044.00 will form a potentially bullish closing price reversal bottom. If confirmed on Wednesday, this could trigger the start of a 2 to 3 day counter-trend rally.

A closing price reversal bottom doesn’t change the main trend to up, but it often indicates the selling is greater than the buying at current price levels.

Tuesday’s rally looks like investors found value at 12957.25 to 12942.50. The intraday rally could be a combination of new buying and position-squaring ahead of the Fed announcements on Wednesday. One could even build a case for strong hopes for a ceasefire in Ukraine.

E-mini NASDAQ-100 in Position to Take Out 10-Month Low

June E-mini NASDAQ-100 Index futures are inching higher early Tuesday in a relatively uneventful trading session.

In yesterday’s session, the tech-heavy index tumbled to a new low for the year and nearly its lowest level since May 2021 as traders kept an eye on the conflict between Russia and Ukraine, as the two countries resumed peace talks. A highly anticipated rate hike by the U.S. Federal Reserve later this week also weighed on prices.

At 06:45 GMT, the June E-mini NASDAQ-100 Index futures contract was trading 13077.00, up 33.00 or +0.25%. The Invesco QQQ Trust Series 1 ETF (QQQ) settled at $318.23, down 6.17 or -1.90%.

Among the losers in Monday’s trade, Qualcomm Inc fell 7.25%, Micron Technology was off 4.70% and Marvell Technology Inc was down 4.50%.

Moderna Inc was up 8.59% on reports of a COVID-19 outbreak in China and Hong Kong.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out a pair of main bottoms at 13106.75 and 13031.00.  A trade through the May 2021 main bottom at 12957.25 will reaffirm the downtrend on Tuesday. A move through 13858.00 will change the main trend to up.

Short-Term Outlook

With downside momentum increasing, we continue to look for investors to probe and poke at former bottoms in an effort to find the key value area that could lead to a turnaround in the market. In the meantime, however, investors may have to put up with a few spikes to the downside since the distance between major support levels is quite large.

There are two ways this sell-off can end. Both take time to develop, but one is a little faster than the other.

Firstly, investors are going to have to find a value level attractive enough to stop the selling. Then they are going to have to build a support base. It’s often said that “The Height of the market is determined by the length of the base” so we’re going to need to see a solid elongated base built to provide the support needed to challenge new all-time highs. But this takes time to form.

Secondly, another way to signal a major bottom is to produce a closing price reversal bottom that is massive enough to wipe out a large number of short-sellers and attract enough new buyers to drive out the short-sellers still hanging on for lower prices.

The first leg up from the bottom is going to have to be a game-changing move, typically signaled by strong buying volume. After the bottom is establish then we’re going to have to see a series of higher bottoms and higher tops in order to tell us that new investors are coming in to support the market on the dips.

Given the current prolonged move down in terms of price and time, however. The simplest sign that the market is attracting new buyers will be a change in trend. It’s been a while since a main top was taken out so a move through 13858.00 over the near-term may be the easiest way to tell us that sentiment is shifting. Until that happens, the mantra in the market will be, “Think long, Think wrong.”

For a look at all of today’s economic events, check out our economic calendar.

Recovery of 13710.00 Could Launch NASDAQ-100 into 14146.25

June E-mini NASDAQ-100 Index futures are posting a strong comeback shortly before the cash market opening on Friday amid reports that ceasefire talks could be gaining traction between Russia and Ukraine.

Amid a steep overnight plunge, Reuters sent a brief report quoting Russian President Vladimir Putin saying that “certain positive shifts” have occurred in the talks. The news fueled a massive short-covering rally, sending the technology-weighted index within striking distance of yesterday’s close.

At 12:05 GMT, June E-mini NASDAQ-100 Index futures are trading 13796.00, up 212.75 or +1.57%. On Thursday, the Invesco QQQ Trust Series 1 ETF (QQQ) settled at $331.42, down $3.57 or -1.07%.

The index is trying to recover from a sell-off on Thursday that was triggered by a report from the Bureau of Labor Statistics that showed the consumer price index rose 7.9% in February, even more than expected and the highest level since January 1982.

On Friday at 15:00 GMT, investors will get the opportunity to react to the preliminary reading for the University of Michigan consumer confidence survey. It is expected to nudge higher to a reading of 62 from 61.7 in February.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trying to shift higher following the formation of a potentially bearish closing price reversal bottom on Wednesday.

A trade through 13031.00 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through 16700.00.

The minor trend is also down. A trade through 14389.00 will change the minor trend to up. This will confirm the shift in momentum.

The minor range is 13031.00 to 14389.00. The index is currently trading on the strong side of its pivot at 13710.00, making it support.

The second minor range is 15261.25 to 13031.00. Its 50% level at 14146.25 is the next potential upside target.

The short-term range is 16700.00 to 13031.00. If the minor trend changes to up then look for the rally to extend into its retracement zone at 14865.50 to 15298.50.

Daily Swing Chart Technical Forecast

The direction of the June E-mini NASDAQ-100 on Friday is likely to be determined by trader reaction to 13710.00.

Bullish Scenario

A sustained move over 13710.00 will indicate the presence of buyers. If the move creates enough upside momentum then look for a surge into 14146.25, followed by the minor top at 14389.00.

Taking out 14389.00 will change the minor trend to up and shift momentum to the upside. This could generate the upside momentum needed to challenge the short-term 50% level at 14865.50.

Bearish Scenario

A sustained move under 13710.00 will signal the presence of sellers. If this brings in enough sellers then look for the move to possibly extend into 13031.00, followed by 12957.25. The latter is a potential trigger point for an acceleration to the downside with 12200.00 the next major target.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ-100 Reversal Targets 13747.25 – 13984.25

March E-mini NASDAQ-100 Index futures are trading sharply higher at the mid-session after reversing earlier losses. The rally is being fueled by the news that the United States banned Russian oil and other energy imports over the invasion. The move suggests a “sell the rumor, buy the fact” situation is driving the price action.

At 18:12 GMT, March E-mini NASDAQ-100 Index futures are trading 13651.25, up 330.50 or +2.48%. The Invesco QQQ Trust Series 1 ETF (QQQ) is at $333.12, up $8.26 or +2.54%.

In stock-related news, Megacaps Amazon.com Inc, Google owner Alphabet Inc, Tesla Inc and Meta Platforms edged higher after plummeting on Monday.

Additionally, the NASDAQ on Monday ended down 20.1% from its November 19 record high close, confirming the tech-heavy index has been in a bear market, according to a widely used definition.

Daily March E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 13025.75 will reaffirm the downtrend. A move through 14391.00 will change the main trend to up.

The minor range is 14391.00 to 13103.25. Its 50% level at 13747.25 is the first upside target.

The main range is 12263.50 to 16768.00. Its retracement zone at 13984.25 to 14515.75 is the resistance zone controlling the near-term direction.

Short-Term Outlook

The index is currently in a position to post a potentially bullish closing price reversal bottom. This may not change the trend, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.

Momentum will also shift to the upside with 13747.25 to 13984.25 the first target area. Since the main trend is down, sellers could come in on the first test of this zone. Overcoming 13984.25 will indicate the short-covering is getting stronger. This could trigger a rally into the main top at 14391.00.

If the intraday surge was just a knee-jerk reaction to the news then look for the selling pressure to resume. Taking out 13103.25 will negate the intraday rally with 13025.75 the next target.

Taking out 13025.75 will reaffirm the downtrend with the May 12, 2021 bottom at 12968.00 the next target. This is a potential trigger point for an acceleration into the March 8, 2021 main bottom at 12263.50.

For a look at all of today’s economic events, check out our economic calendar.

BITO: Rising Tensions in Europe Creates Opportunities for Bitcoin

At launch time, the cryptocurrency was valued at $65K compared to $38.7K today. However, after the dip to the $35K level suffered in the final week of January, things are looking better for BITO, which, it must be mentioned does not invest in bitcoin directly. Still, as seen in the orange chart below, the ETF’s share price is closely correlated to bitcoin‘s, depicted here in purple.

Comparison
Comparison of price performance

My aim with this thesis is to analyze BITO’s performance in the last month when it gained 15.63% compared to the S&P’s negative 2.39% (-2.39%). This period coincided with the Russian aggression against Ukraine and the imposition of economic sanctions by the United States and its allies.

Invasion and economic sanctions benefiting bitcoin

First, the concept of an economic sanction against countries that go against U.S interests whereby their foreign currency reserves are frozen is not something new. Some of these sanctions remind us of the ones imposed on Huawei two years back and which hit the Chinese telecom giant so hard that it lost billions of dollars of sales. Iran has also been previously impacted by sanctions which severely curbed the ability of its banks to trade in foreign currencies.

This time, America and its allies have gone a step further by punishing Russia which happens to be the world’s eleventh-largest economy by nominal Gross Domestic Product and a giant natural gas exporter. Some of the country’s banks have been barred from utilizing the Swift banking network, which severely limits their ability to receive or issue payments worldwide.

Other measures include drastically limiting Russia’s access to European capital markets and crucial technologies including semiconductors, electronic components, and software. Additionally, sanctions that were intended to hit individuals in Mr. Putin’s circle of power like freezing of their assets mostly in European territories have unfortunately reverberated on ordinary citizens as they queued to withdraw foreign currency from local banks.

Moreover, Russia which has about $630 billion of reserves in dollars is being prevented from accessing it. This is a huge amount and means that the idea of the dollar being viewed as a worldwide reserve currency plus a safe store of value is now jeopardized and only applies to countries that abide by U.S. values and interests. This level of currency weaponization is something unprecedented and paves the way for alternative means of transacting or stores of value, with one of them being cryptos.

Also, many are turning to cryptos because of practical benefits.

First, in light of their own currency losing value similarly to ice melting in the sun, crypto represents a safe store of value for Russians and Ukrainians alike. Second, if you are a Ukrainian refugee, it’s easy to transport as people only need to memorize the seed phrase. In comparison, gold and paper-based currencies like dollars or the European euro can be easily stolen by corrupt border guards. Storing bitcoins on an exchange constitutes some risk but is still better than transporting paper or metals.

Furthermore, cryptocurrency donations have poured in to support pro-Ukraine groups with NGOs, and volunteer groups have received 30 million dollars in form of cryptocurrencies since the Russian invasion. Bitcoin donations are also pouring in to support Ukraine’s military because it’s quick and easy, as it bypasses national financial and monetary regulations.

Thus, crypto-assets have emerged as an alternative funding method as they enable cross-border donations that circumvent financial institutions that might otherwise block payments. Also, at this stage, it is hard to see any action by U.S. regulators which may impede the flow of money into Ukraine.

BITO both as investment and trading tool

Increased flow levels led to higher bitcoin demand, but, BITO’s underlying fund does not invest directly in the digital coin as I mentioned above. Instead, as the first U.S. bitcoin-linked ETF, it provides exposure to bitcoin futures contracts. Now, a contract is normally a term used for the commodities market and allows investors to speculate on a product’s future price in order to gain from short-term price movements without holding it. In the case of BITO, it is bitcoin.

As per the fund managers, BITO “also offers investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way”.

However, historically speaking, the fund has failed in its objective to provide capital appreciation, at least for those who have held it from inception as illustrated by an initial investment of $10K being worth less than $7K today.

capital appreciation
Growth of $10K invested in BITO (www.proshares.com/our-etfs/strategic/bito)

Still, due to the liquidity factor and the fact that it is volatile, BITO can enable traders to achieve considerable gains. An example is an investment done around October 27 when the share price was around $38 being valued at $43 just two weeks later.

For this matter, BITO’s average daily share volume at 8 million is nearly eight times more than the Valkyrie Bitcoin Strategy ETF (BTF) which was incepted just days after BITO and also holds future contracts. The ProShares ETF has $676 million of assets under management compared to only $33.58 million for its peer. Both ETFs charge fees of 0.95%.

comparing
Comparing BITO and BTF (seekingalpha.com/symbol/BITO/peers/comparison)

Thus, investing in bitcoin futures contracts through BITO allows investors to better profit from short-term price movements regardless of the long-term direction and this is helped by the fact that crypto enjoys international recognition, making it suitable for everyone at anytime and anywhere in the world.

The risks and the long term rationale

However, keeping and paying with bitcoin comes with risks as the value of a currency is largely dependent on people’s trust. The trust level shot up with the events in Ukraine mainly due to erosion in confidence in traditional or fiat currencies caused by uncertainty. However, cryptocurrencies remain largely unregulated, extremely volatile, and not completely immune to hacker attacks due to the fact that they are digital in nature.

Still, relativizing risks, I consider that in view of heightened tensions in Ukraine, high-inflation concerns in Europe due to rising energy costs, and the euro losing ground against the dollar, there are more opportunities for bitcoin which is based on blockchain software residing on a decentralized network of computers around the globe.

Thus, virtually available bitcoin now looks relatively less vulnerable compared to physical currencies sitting in central banks whose dollar assets may not prove useful when most needed, depending on whether their leadership is aligned with the West.

The above factors should gradually contribute to making crypto assets more central to finance and payments.

Therefore, given the possibility of other countries being sucked into the conflict, there could be wider adoption of crypto somewhat similar to El Salvador where there was a decision to adopt bitcoin as legal tender last year. Even if governments do not go that far, some Eastern European leaders may order their central banks to diversify some of their dollar assets into bitcoins as a precautionary measure.

There is another factor that should increase demand for digital assets.

For this purpose, in addition to the crowd funding aspect, whereby the objective is to raise funds from common people for supporting Ukrainians, there are also projects based on Non-Fungible Tokens or NFTs.

Thus, OpenSea, the largest NFT marketplace is hosting a collection of unique artworks by Artists for Peace and collectors can bid for about 60 pieces in Ethereum (ETH-USD) with the proceeds going towards supporting the Ukrainian people. Now, Ethereum is different from bitcoin, but, as the second cryptocurrency by market valuation, its wider usage should give support to the crypto world in general.

Coming back to BITO, for those who have held to their investments, the ETF represents a safe way to remain invested in the cryptocurrency without risk of theft or misappropriation.

Finally, my bullish stance is firstly reinforced by crypto breaking its correlation with (or decoupling from) the tech sector as I had initially pointed out in my article on the Grayscale Ethereum Trust (OTCQX:ETHE) two weeks earlier. Hence, BITO (in blue) is now outperforming the Invesco QQQ Trust (QQQ).

Chart Data by YCharts

Second, according to Zero Hedge, there are reasons to think that the surge in bitcoin’s value and by ricochet BITO’s share price was more the result of investors expecting a surge in demand from Russia than an actual increase. Thus, more crypto demand should sustain the ETF’s upside. Meanwhile, demand for gold as a safe haven asset is up showing that established hedging mechanisms still work.

Taking into consideration these factors I am bullish on BITO for the long term, but do not exclude a surge to $30 by mid-2022, a level last reached at the end of December. This should be also driven by more support from institutions like Citadel, the largest U.S. market maker which is now more favorable to bitcoin.

Finally, at $23.53, BITO is currently available at a slight discount to NAV of $0.03.