Nasdaq analysis post FOMC 17/9/26
“Find ecstasy within yourself. It is not our there. It is in your innermost flowering”. - Osho
Todays market commentary on the Nasdaq one day after FOMC day. As usual the market makers managed to shake us out of some of our trades. But overall we still feel that we have done relatively well. If our bias is right and the market makes new highs, then there is a good chance that the portfolio will start to outperform the market again in the coming weeks. This is because we have positioned both the portfolios to stocks which have exposure to Anthropic IPO in about 4 weeks time and just ahead of the crucial Midterm elections.
One of the key premises that we at Muffett investments operate on is that the market can be manipulated and it has always happened. By identifying manipulation, we gain an edge which can potentially outperform many passive strategies.
This is the daily chart of Nasdaq. The price had been in a range from May to Joly. Towards the end of July, the price was manipulated down. The stocks which are going to outperform would have been already accumulated. This move down creates fear and many investors will sell out of their stocks. The market makers buy the stocks at discount. and then price is rapidly moved up. This move creates fear of missing out and induces retail traders (this includes Muffett0 to buy into the market and suddenly the price goes back into consolidation. The stocks which are likely to outperfom in the next rally will be accumulated there. What is important to realise is that we will never know when a consolidation is forming . This can only be found in hindsight after looking at the chart.
So although we only know a consolidation ( accumulation by market makers) we can expect that there is a good chance manipulation will happen. If we are patient many times ( Not all times) we can identify manipulation and once you have seen this you enter on the side of the market makers. Here we have been in a range and then price was manipulated below the range taking the sellside liquidity. This is the manipulation. It induces traders to sell out of their positions ( like we did with Newmont at Muffett investments) The price is then moved up aggressively and it is very liekly that we will go atleast to the top of the range.
This is the 4 hour chart. We have done a standard deviation projection from the last manipulation leg high to the low. This gives 2.5 projection at 30460 which is near previous highs. ALso if you look closely, we had a double purge where price goes above equal lows and then slams down and then takes out the lows near the bottom. This kills both the longs and the shorts. We now have an aggressive move highers.
We are watching 29450- 29480 region. It is important that we close above 29450 level and ideally above 29480. If this happens, the market will flip bullish and the algorithms will go crazy and they will move the marke tto 30450. If we close below this level, then the bullish outcome is less likely and we will need more confirmation for a bullsh bias.
We have seen divergence at the lows between the S&P 500 and the Nasdaq. The Nasdaq did not make a lower low. This suggests that the Tech stocks are showing relative strength including the MAG7. We have pointed this out during the weekend market commentary.
So we are going to maintain out bullish bias and but we would be very cautious intil we have a daily close above 29450.
Now we have a propreitary scanner which we have developed and we have identified several stocks which have shown accumulation pattern. we are still developing and testing this scanner. But we feel that these stocks will outperform over the next 4 weeks. These include
AMD
ARM Holdings
Meta
Microsoft
Amazon
Google
Nebius
Micron technology
Marvell technology
Lumentum
Intel corp
Dell technologies.
Ideally, the best place to buy is at the 20 day ema with risk management stops. All these are momentum plays only and should not be held for the long term in our view.
All analysis done in good faith and not investment advice.
May the Peace of the Lord be upon you all.
