Nasdaq NQ - Is It Time To Sell The Rip?
Diupdate
Greed quickly became extreme at the end of July, and the beginning of August has severely punished bulls, who are still buying the dip and buying the dip.
The July high on Nasdaq happened to occur along with the Dow and the SPX in that all three indexes swept out the January '22 pivot that amounted to a rejection that ended that unprecedented bull market.
Looking at monthly bars, you can see how extreme this '23 bear market rally has been, and how far the Nasdaq is above its long-term trendlines, how the COVID points were never tested on SPX or Nasdaq, but were raided on the Dow...
And you get some perspective on the weekly bars.
Here's some key problems for bulls:
1. Equities don't like high interest rates. Big money is needed to move markets and that money likes to seek safe yield. When rates are really high, bonds are really cheap to buy, and money tends to flow into them instead of equities.
2. This means equities rallies in high interest rate environments are bear market rallies by definition. Smart money pumps and sells equities to fuel a buying spree in bonds.
3.With Fed rates pushing 5.5% and there being no chance of cuts until inflation goes from 4% to 2% sustained on a long term basis, ask yourself what really is the bull case that's going to lead to new all time highs?
When you're dealing with multiple fundamental factors that are bearish, but price action is bullish, you absolutely have to be cautious, or else you're likely to get gibed.
Moreover, geopolitical problems are really serious. The biggest problem is the situation in Mainland China with a Chinese Communist Party that is about to fall while the Western propaganda outlets report on absolutely nothing of significance.
All the talk about "Taiwan War" is to make a pariah of Xi Jinping and his faction of Chinese nationalists. What all the globalists are really preparing for is how to take control of China when the CCP falls.
To do this, they need to position a man that has been groomed to take control of the country, and this will be done using the Republic of Taiwan as a proxy.
But "the best laid plans of mice and men" is an issue.
Overhanging all of humanity's head like the Sword of Damocles is the 24-year persecution and organ harvesting genocide of Falun Dafa's 100 million spiritual practitioners by the CCP and former Chairman Jiang Zemin's faction.
Although Xi has been killing toadJiang's toad faction for over a decade with the Anti-Corruption Campaign, the problem is that Xi is still the Chairman of the Party, and all of its sins in 100 years hang over his neck like a noose.
If Xi is smart, he'll overthrow the Party Gorbachev style.
And if he isn't, he'll go down with it.
But either way, when the Party goes, the persecution will become the #1 issue that all of humanity will have to face, for the sin is extreme.
Equities markets will not be bullish those days, and you truly will be in a new paradigm.
So here's the short term price action on the Nasdaq.
End of July and early August price action confirms that the top, for now, is in. This means that dips are no longer buyable. It's only that you can short the rips.
This will remain true until a certain downside objective is met, and when this becomes true, that downside objective is pretty much exclusively where an old low is.
We have two areas of concern for lower prices.
One is the June low at 14,250. Although I don't expect the market makers to take this point before September, it certainly is possible.
More significant is the 14,850 pivot from the end of June. This number happens to result in a raid on the psychological 15,000 level, there's a gap nearby, and it can serve as a useful level to bounce for heading into the end of August.
Keep in mind that August's monthly options expire on the 18th, which leave a solid 9 trading days remaining before the end of September.
While you might feel that these targets are too far away to be realistic, keep in mind that dumping to 14,100 from where markets closed on Friday is really only 8%.
8% on QQQ amounts to like $25 and isn't that big of a deal compared to what some other three digit stuff does in a single day.
And maybe you really don't believe it either way. But take a look at Apple, the most important stock on the market. It's showing you all the signs that you'd ever need to see that it's either topped or will raid $200 once before going down:
Apple - So, You've Been Taught To Buy That Dip...
Same with Microsoft
Microsoft - Is The Top Already In?
Same with Netflix
Netflix - I Hope You Like Catching Knives
The scary thing about tops is that the first time you get the sell off, the sell off tends to hurt longs, scare them out, and then you get a bounce that flirts with old highs.
And that pattern leads to the "sell low, buy back higher" phenomenon.
Which results in people buying the tops, hard, and permabears missing their chance to be short and missing the entire move down.
But if you understand what's going on, you can capitalize on the early downside, the early bounce, and Godshort the top and ride the trend down.
It's hard to do because of human emotions and the interference of long periods of time. But the wisdom is right here to do it.
A potential timeline for the downside to finish is literally as early as Wednesday, because August CPI is on deck for Thursday.
Another option is that CPI leads to the blowout under 15,000 and the bounce is into the end of August.
Beware the JPM Collar. Expiring September 29, they're long on SPX puts with a strike of 4,200.
Just ask yourself if America's most keystone systemically important bank is going to be expiring worthless like retail traders do.
The July high on Nasdaq happened to occur along with the Dow and the SPX in that all three indexes swept out the January '22 pivot that amounted to a rejection that ended that unprecedented bull market.
Looking at monthly bars, you can see how extreme this '23 bear market rally has been, and how far the Nasdaq is above its long-term trendlines, how the COVID points were never tested on SPX or Nasdaq, but were raided on the Dow...
And you get some perspective on the weekly bars.
Here's some key problems for bulls:
1. Equities don't like high interest rates. Big money is needed to move markets and that money likes to seek safe yield. When rates are really high, bonds are really cheap to buy, and money tends to flow into them instead of equities.
2. This means equities rallies in high interest rate environments are bear market rallies by definition. Smart money pumps and sells equities to fuel a buying spree in bonds.
3.With Fed rates pushing 5.5% and there being no chance of cuts until inflation goes from 4% to 2% sustained on a long term basis, ask yourself what really is the bull case that's going to lead to new all time highs?
When you're dealing with multiple fundamental factors that are bearish, but price action is bullish, you absolutely have to be cautious, or else you're likely to get gibed.
Moreover, geopolitical problems are really serious. The biggest problem is the situation in Mainland China with a Chinese Communist Party that is about to fall while the Western propaganda outlets report on absolutely nothing of significance.
All the talk about "Taiwan War" is to make a pariah of Xi Jinping and his faction of Chinese nationalists. What all the globalists are really preparing for is how to take control of China when the CCP falls.
To do this, they need to position a man that has been groomed to take control of the country, and this will be done using the Republic of Taiwan as a proxy.
But "the best laid plans of mice and men" is an issue.
Overhanging all of humanity's head like the Sword of Damocles is the 24-year persecution and organ harvesting genocide of Falun Dafa's 100 million spiritual practitioners by the CCP and former Chairman Jiang Zemin's faction.
Although Xi has been killing toadJiang's toad faction for over a decade with the Anti-Corruption Campaign, the problem is that Xi is still the Chairman of the Party, and all of its sins in 100 years hang over his neck like a noose.
If Xi is smart, he'll overthrow the Party Gorbachev style.
And if he isn't, he'll go down with it.
But either way, when the Party goes, the persecution will become the #1 issue that all of humanity will have to face, for the sin is extreme.
Equities markets will not be bullish those days, and you truly will be in a new paradigm.
So here's the short term price action on the Nasdaq.
End of July and early August price action confirms that the top, for now, is in. This means that dips are no longer buyable. It's only that you can short the rips.
This will remain true until a certain downside objective is met, and when this becomes true, that downside objective is pretty much exclusively where an old low is.
We have two areas of concern for lower prices.
One is the June low at 14,250. Although I don't expect the market makers to take this point before September, it certainly is possible.
More significant is the 14,850 pivot from the end of June. This number happens to result in a raid on the psychological 15,000 level, there's a gap nearby, and it can serve as a useful level to bounce for heading into the end of August.
Keep in mind that August's monthly options expire on the 18th, which leave a solid 9 trading days remaining before the end of September.
While you might feel that these targets are too far away to be realistic, keep in mind that dumping to 14,100 from where markets closed on Friday is really only 8%.
8% on QQQ amounts to like $25 and isn't that big of a deal compared to what some other three digit stuff does in a single day.
And maybe you really don't believe it either way. But take a look at Apple, the most important stock on the market. It's showing you all the signs that you'd ever need to see that it's either topped or will raid $200 once before going down:
Apple - So, You've Been Taught To Buy That Dip...
Same with Microsoft
Microsoft - Is The Top Already In?
Same with Netflix
Netflix - I Hope You Like Catching Knives
The scary thing about tops is that the first time you get the sell off, the sell off tends to hurt longs, scare them out, and then you get a bounce that flirts with old highs.
And that pattern leads to the "sell low, buy back higher" phenomenon.
Which results in people buying the tops, hard, and permabears missing their chance to be short and missing the entire move down.
But if you understand what's going on, you can capitalize on the early downside, the early bounce, and Godshort the top and ride the trend down.
It's hard to do because of human emotions and the interference of long periods of time. But the wisdom is right here to do it.
A potential timeline for the downside to finish is literally as early as Wednesday, because August CPI is on deck for Thursday.
Another option is that CPI leads to the blowout under 15,000 and the bounce is into the end of August.
Beware the JPM Collar. Expiring September 29, they're long on SPX puts with a strike of 4,200.
Just ask yourself if America's most keystone systemically important bank is going to be expiring worthless like retail traders do.
Catatan
Nasdaq was the only of the three indexes to make a new low this morning.The question is, will the MMs now "show support" at this level and take it higher?
If so, it's another rip to look at selling.
Catatan
Blah blah credit agency downgrades.Everything is indicating we're going under 15,000.
Catatan
Price action does not make me believe we've bottomed, since 15,000 hasn't been swept out. But what what's going on, I somewhat suspect 15,600 gets raided on CPI and then we trade lower.
Thursday could be a very large range day.
Catatan
No bounce since Monday morning, 15,000 being instantly rejected the first try, tells us it's no longer bull town and the first bounce area to look for is the 14,600 gap.
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