We noted last weekend in NFTRH that it was probably not a good thing that the VIX’s tech-related cousin, the Vixen was dropping in lockstep with the expected bounce in the Nasdaq 100. Here’s the weekly chart.
Much like you want to see a stubborn refusal to accept risk at a bottom, you want to see them buying back risk on a bounce at a top. Well, you want to if you are short, which I am.
Here is the weekly view of the index to which the Vixen is assigned…
*Note, I am going to post NFTRH+ dry runs at the site using the password for the week, but will not send a direct email, so as not to clutter the in boxes of those who are not interested.
I covered the short against the Nasdaq 100 today because, while it hit a very valid and anticipated bounce high last week (where the short was taken), it is FOMC week, Ukraine week and economic data week. Take profit.
I have shorts against gold and junior miners (which I’ll need to spend the next 45 min. or so deciding whether or not to cover), mostly because I did not believe the bounces last week amid the Ukraine hype, as noted here at the site in real time. I am holding those because I still hold some precious metals long positions. But as noted in NFTRH, there is much more work to do before they give any kind of a bullish signal.
Anyway, SPX is at support again. FWIW.
In fact, the Nasdaq 100 is almost too perfectly on plan. How often do we map out a bottom and a bounce target, initiate short positions (I hold QID) and see things continue to work out? Answer: These are the markets, so not often.
The setup seems almost too perfect in its tap and drop from resistance. Headlines trumpet Ukraine (and that is bullish), but they also note negatives from Amazon, Visa and Ford. That’s obviously bearish and in line with our bigger picture scenario of renewed economic contraction at some point.
Yesterday we noted that the Nasdaq 100 was still on its bounce plan to 3600. Then Apple came out with cheery words about how under valued its stock is (I do not necessarily disagree) and zoom, there goes the NDX… and it is still 100% on plan; and the plan is bearish. Not that it cannot change (these are the markets after all), but nothing has changed yet. NDX is getting up into a lot of traffic in the 3600 area.
At this point today is just a resistance point on the recovery rally off what may now be considered a neckline at 3425. Something as bearish as a Head & Shoulders, if it comes to be, would have needed a counter bear trend burst of enthusiasm to make a right shoulder, and that is what happened over the last week or so. Well the burst, not a shoulder (yet).
Our target was 3600 and NDX certainly has the ability to take a short term pullback and then hit and exceed 3600. But the overall setup remains bearish even if another leg upward comes about but puts in a top lower than the would-be Head. That would be a fine shoulder. The pattern does not actualize until the neckline way down there at 3425 is taken out. But it’s something to keep in mind. That could be some healthy downside maybe sometime this summer.
Just a week ago they were so scared, so disoriented. So the bear at biiwii got bullish while they fretted. Now the newly brave dumb money does what it does best as it chases the momentum in a rush of greed. It is funny watching these things play out. It’s 3600 or bust for NDX! You go bulls.
Last week we projected 2 out of 2 charts agree; Nasdaq 100 target is 3600 +/- so why should we be surprised that the bounce is continuing? It is only doing what it was supposed to do. Could SPX (lower panel) be up for a test of the highs?
The daily chart would logically project to the 50 day moving averages if the bounce continues and gains strength  because in a down trend that is a notable ‘if’.
The weekly chart agrees that 3600 is the target with the broken trend channel and lateral resistance.
The US stock market is negative pre-open, but don’t be surprised if we get a strong bounce soon. It could be a trade-able bounce. I have bought a couple items in anticipation and am watching several more.
A bounce is a bounce; a trade. It is what happens on a would-be bounce that will be important going forward. What will the market do at resistance? That will tell us a lot about what this thus far mini correction will be, another quickie or something more lasting.
SPX has firm support at around 1800.
One of the leaders, NDX needs to bottom shortly and make a ‘higher low’ to February or it is going to activate a bearish intermediate signal.
Yesterday HUI did exactly what we asked it to do in order to remain normal to the current plan. It dropped into the 224’s, filled the gap and has not made a lower low to the last green arrow. So it remains in a baby uptrend. I would not get too concerned about reading a rising wedge into a 30 minute chart, but it is inserted regardless to again play Devil’s Advocate.