The Nasdaq 100, which is the strongest of the main US stock indices finally broke its 2019 uptrend on Friday, as Trump was able to feed massive uncertainty in the markets, as investors lost complete confidence in Trump & most likely any hopes for the US to avoid a recession.
Leading up to Friday's shocking sell off in US stocks, the muted rally we saw during last week of small moves higher was in fact made on terribly low volume, which is considerable below the daily average.
The low volume during a move higher in trend, was similar to the slow run higher in July 19 to new all-time highs. This was also just before a strong sell off on increased volume that occurred. If you’re paying attention this would have been a big red flag for traders & investors.
Another red flag for the Nasdaq 100, is that we have confirmed a lower high and lower low signaling a change in control from buyers to sellers in the daily charts.
Looking ahead for the Nasdaq 100, the support area of 7,400 is the last final confirmation required from the market before we can confirm a change of trend. Therefore Monday's trading is super important for short term direction for the Nasdaq especially if we clearly close below this area. A breach of 7,400 support would indicate the next support level of 7,025 for the Nasdaq 100
Lastly unless there is some miracle from the Central Banks with more intervention, and we see a big shift in bullishness. With the Nasdaq 100 somehow jumping back above its uptrend line and above the 52 day moving average (green line). We are likely looking at the start of the end of the bull market in US stocks.
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I am a private trader and equities investor that loves the trading and investing world, following the markets and everything in between.