Week's top three trades: Nasdaq100

Darren Chu, CFA Tradable Patterns

Nasdaq100 (NQ) edged lower Friday after strongly reversing from the intraday high in the US afternoon. With the lower January low and high vs the December low and high, any test of the January high in February is now only moderately but increasingly unlikely. Before bears get excited, NQ will need to break below last Monday’s low, which based off Friday’s strong intraday reversal, is moderately likely by the end of this week. The January Gravestone reversal from its upper shadow high together with the early stages of a February Doji further suggest that NQ may have made its high for the major bull market extension that began late 2022. Watch for more volatility Monday with the US ISM manufacturing PMI, Tuesday with the US JOLTS job openings, Wednesday with the US ADP Non-Farm employment change and US ISM Services PMI, Thursday with the US unemployment claims and Friday with the highly anticipated US average hourly earnings, non-farm employment change, and unemployment rate.

The weekly, daily and 4hr RSI, Stochastics and MACD are tiring or steadily sloping down. I am looking to enter short in the red zone (of the daily chart), targeting the green zone for Friday. The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I sometimes set my stops tighter).

Author

Darren Chu, CFA

Tradable Patterns

Darren Chu, CFA, ex-Intercontinental Exchange | NYSE Liffe, TMX Group, CMC Markets, is the founder of Tradable Patterns – a publisher of futures/FX technical analysis on Bloomberg, LSEG (Refinitiv) and Factset.

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