Nasdaq (NDX QQQ) proving to be lead indicator, break at 13,297 would close gap to 13,167
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UNLOCK OFFER- Nasdaq is proving to be the canary in the coalmine.
- Nasdaq index is set for further losses on Tuesday as futures point lower.
- Traders look to Nasdaq technical targets and key support levels.
The Nasdaq continues to lead stocks lower as it reasserts its bearish tone and investors dump high growth, high valuation stocks. Not much has changed fundamentally, but valuations had become increasingly stretched as 2021 progressed. A pullback was inevitable. Now how far it will go is the key question investors are asking.
Nasdaq (QQQ NDX) forecast
We can see just how far the Nasdaq and other indices are stretched from the 200-day moving average. The first sign of trouble for the Nasdaq was the failure to break new highs when the Dow and S&P 500 pushed higher after Friday's jobs reports. The indicators had turned bearish in late April with both the Moving Average Convergence Divergence (MACD) indicator and Directional Movement Index (DMI) rolling into bearish territory. The Relative Strength Index also turned lower, failing to confirm the trend higher. The Nasdaq made a new high on April 16 and retested this on April 29. The RSI trended lower over this period, however, a bearish divergence. The MACD, as well as crossing over, also trended lower, adding to the bearish signals.
Now the question is always, "What next?" The Nasdaq is now in bearish territory in the short term with both 9 and 21-day moving averages trending lower and the Nasdaq trading below both. 13,333 will likely break today and fill the gap from early April. The high from March 16 is the next support at 13,297 and then another gap to fill at 13,167. Further supports are to be found then at the 100-day moving average at 13,150 and the lower trend line at 12,887. This area from 13,000-12,800 should stall any move lower or at least slow it, as the Nasdaq was stuck here for most of March.
The longer term bullish trend remains intact until 12,627 is broken.
Resistance is at 13,651-13,682 – the area of 9 and 21-day moving average convergence. A break here should see new highs once 13,800 is taken out.
At the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author is short SPY. The author has not received compensation for writing this article, other than from FXStreet.
This article is for information purposes only. The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice. It is important to perform your own research before making any investment and take independent advice from a registered investment advisor.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to accuracy, completeness, or the suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. The author will not be held responsible for information that is found at the end of links posted on this page.
Errors and omissions excepted.
- Nasdaq is proving to be the canary in the coalmine.
- Nasdaq index is set for further losses on Tuesday as futures point lower.
- Traders look to Nasdaq technical targets and key support levels.
The Nasdaq continues to lead stocks lower as it reasserts its bearish tone and investors dump high growth, high valuation stocks. Not much has changed fundamentally, but valuations had become increasingly stretched as 2021 progressed. A pullback was inevitable. Now how far it will go is the key question investors are asking.
Nasdaq (QQQ NDX) forecast
We can see just how far the Nasdaq and other indices are stretched from the 200-day moving average. The first sign of trouble for the Nasdaq was the failure to break new highs when the Dow and S&P 500 pushed higher after Friday's jobs reports. The indicators had turned bearish in late April with both the Moving Average Convergence Divergence (MACD) indicator and Directional Movement Index (DMI) rolling into bearish territory. The Relative Strength Index also turned lower, failing to confirm the trend higher. The Nasdaq made a new high on April 16 and retested this on April 29. The RSI trended lower over this period, however, a bearish divergence. The MACD, as well as crossing over, also trended lower, adding to the bearish signals.
Now the question is always, "What next?" The Nasdaq is now in bearish territory in the short term with both 9 and 21-day moving averages trending lower and the Nasdaq trading below both. 13,333 will likely break today and fill the gap from early April. The high from March 16 is the next support at 13,297 and then another gap to fill at 13,167. Further supports are to be found then at the 100-day moving average at 13,150 and the lower trend line at 12,887. This area from 13,000-12,800 should stall any move lower or at least slow it, as the Nasdaq was stuck here for most of March.
The longer term bullish trend remains intact until 12,627 is broken.
Resistance is at 13,651-13,682 – the area of 9 and 21-day moving average convergence. A break here should see new highs once 13,800 is taken out.
At the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author is short SPY. The author has not received compensation for writing this article, other than from FXStreet.
This article is for information purposes only. The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice. It is important to perform your own research before making any investment and take independent advice from a registered investment advisor.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to accuracy, completeness, or the suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. The author will not be held responsible for information that is found at the end of links posted on this page.
Errors and omissions excepted.
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