Nasdaq levels to watch 19/08/26
"The greatest fear in the world is the opinion of others. And the moment you are unafraid of the crowd, you are no longer a sheep, you become a lion."- OSHO
We were bullish going into the week but yesterday’s price action has invalidated our short term bullish outlook. But all is not lost. Over fundamental premise is still intact and we are expecting price to make new al time highs before the midterm election. However we do not know how far this current correction will last nor do we know whether the recent highs is a beginning of new leg lower. We will base our analysis based on how price action develops and we currently maintain a bullish bias.
The Nasdaq daily chart shows how price took out previous highs then spent 24 hours in consolidation and then on tuesday the price has created a bearish engulfing pattern that has invalidated the previous bullish engulfing pattern candle. Since we have taken buyside liquidity, and now we are close to sell side liquidity there is a chance that sell side lqiuditiy will be taken today. What happens here matters a lot. If we have a purge and revert scenario, then we can maintain a bullish bias and become more aggressive. If we have a close below that then we might see a deeper retracement within the daily dealing range which is the last swing low and last swing high of the current rally.
The 1 hour chart shows the equal lows that we pointed out in a earlier commentary. If we are really bullish, the price should not take the sell side liquidity and just purge the equal lows. If sell side liquidity is taken then a purge happens it is bullish but we know that the momentum is not that strong. Also we are looking far how much price moves back into the range after the purge of sell side liquidity. This also indicates the strength of the underlying move. If price closes below the sell side, we will close some positions to raise cash.
This is the overall sector performance of the S&P sectors. XLV is still outperforming but XLF is holding very well and XLE is starting to rise. It has the highest performance of all sectors over the last 1 week. This is important for subscribers of our outlook series. We should be watching these sectors closely to see if some of our assumptions given in the core thesis are being confirmed in price action. Also many of the semiconductor names were sold off but IGV and the MAGS did not sell off as much. Salesforce and servicenow were even up during the sell off. This is good for our biases in these sectors.
More commentary will follow later during the day.
All analysis done in good faith and not investment advice.
May the Peace of the Lord be with you always.
