NQ Trend Change 9/23/2020
NQ at the daily view.
The NQ is forming a new downward channel . I was waiting to see if this is a dip or an actual trend change. From the looks of it, the downtrend is pretty much confirmed. Why is that?
1) Former uptrend channel is broken. Now, there is a solid resistance at the top of the new channel. However, I am not quite sure where the bottom of the channel is. That will be changing over time.
2) Liquidity levels are getting weak. For example, HYG (junk bonds) have broken its uptrend and key support on the same day. Corporate credit is now destabilizing.
3) Market breadth is at a downtrend or made some lower lows. That's NYAD and NAAD.
4) VXN is in an uptrend.
5) FOREX traders are running to safe haven assets (e.g. Japanese Yen).
6) DXY or dollar strength re-entered into its old 11-year-old channel again and in a RSI uptrend. The NQ is allergic to a stronger dollar.
7) Bonds are starting to breathe life again.
I didn't trade for nearly 2 weeks because of all the evidence I need to confirm a trend change. You don't trade purely based on gut feeling. You need to process data and multiple charts to make sense of the big picture. That's the difference between real traders and sports gamblers. Gamblers just trade based on feelings and then get hurt.
This is not a crash. This is a correction or downtrend. If this was a true crash, then no asset would be considered safe like what happened in March 2020. How far will it go? I don't know and I won't guess. I just take it one day at a time. That said, I do not see a black swan event that would recreate the March crash nor do I see the need for people to cash out quickly like they would in a disaster... or a pandemic.
This downtrend is pretty on par with election year volatility. Besides, Amazon, Apple, and Tesla are cult stocks. Even if you sold the NQ off, there will always be a group of fanatics.
I think the best quote I found today is "Tesla traders who are bagholders now identify as investors."
The NQ is forming a new downward channel . I was waiting to see if this is a dip or an actual trend change. From the looks of it, the downtrend is pretty much confirmed. Why is that?
1) Former uptrend channel is broken. Now, there is a solid resistance at the top of the new channel. However, I am not quite sure where the bottom of the channel is. That will be changing over time.
2) Liquidity levels are getting weak. For example, HYG (junk bonds) have broken its uptrend and key support on the same day. Corporate credit is now destabilizing.
3) Market breadth is at a downtrend or made some lower lows. That's NYAD and NAAD.
4) VXN is in an uptrend.
5) FOREX traders are running to safe haven assets (e.g. Japanese Yen).
6) DXY or dollar strength re-entered into its old 11-year-old channel again and in a RSI uptrend. The NQ is allergic to a stronger dollar.
7) Bonds are starting to breathe life again.
I didn't trade for nearly 2 weeks because of all the evidence I need to confirm a trend change. You don't trade purely based on gut feeling. You need to process data and multiple charts to make sense of the big picture. That's the difference between real traders and sports gamblers. Gamblers just trade based on feelings and then get hurt.
This is not a crash. This is a correction or downtrend. If this was a true crash, then no asset would be considered safe like what happened in March 2020. How far will it go? I don't know and I won't guess. I just take it one day at a time. That said, I do not see a black swan event that would recreate the March crash nor do I see the need for people to cash out quickly like they would in a disaster... or a pandemic.
This downtrend is pretty on par with election year volatility. Besides, Amazon, Apple, and Tesla are cult stocks. Even if you sold the NQ off, there will always be a group of fanatics.
I think the best quote I found today is "Tesla traders who are bagholders now identify as investors."