This week in "Labor Day" I spoke about how the Nasdaq mkt, which has been a leader for over a year, was sitting at a precarious position within its trend channel & in regards to the ichimoku cloud
I mentioned this week was a huge week for data for a market that was worried about growth. Many would be focused on non-farm payroll but there was more important data leading up to that
You can read that Substack here: https://open.substack.com/pub/stayvigilant/p/labor-day?r=11qyxj&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true
Yesterday, the mkt was hit with news that growth looks to be weakening more than expected. The ratio of new orders to inventories collapsed in the ISM report which was even more negative than the headline number that was also weaker than expected
From the release: "The combination of falling orders and rising inventory sends the gloomiest forward-indication of production trends seen for one and a half years, and one of the most worrying signals witnessed since the global financial crisis"
WOW. That's some bearish sounding news there. How did the market take it? Well we know the answer to that - not well
The chart today shows the Nasdaq futures are resolving their condition to the downside. Entering the week, futures sat right on the trendline & in the cloud, as you can see in the circle on the top chart, that has given way
In addition, in the middle panel, you can see the MACD rolling over and heading lower suggesting a change in trend is afoot. The lagging span highlighted in red is still holding above support. If that gives way, look out below
How low could futures go? Just looking at the move from the October low to the July high, and measuring the Fibonacci retracement, we could see a correction into the 16750-17500 area, a move of about 10% from here
The market is super sensitive to this price action because it knows September is seasonally the worst month of the year for stocks. So when the first trading day resolves the technical to the downside, you can guess that people are aware
There is still other data this week that could show the ISM data was misguided. I personally put a lot of weight on ISM and its components. Others put more weight on things like NFP. That's what makes a mkt
Either way, the mkt is in a precarious spot at the moment, so it is best to tread very lightly. If you are getting involved, make sure you have tight risk management regardless of the side you are on
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Resolving lower?
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Chart of the Day - resolving lower
This week in "Labor Day" I spoke about how the Nasdaq mkt, which has been a leader for over a year, was sitting at a precarious position within its trend channel & in regards to the ichimoku cloud
I mentioned this week was a huge week for data for a market that was worried about growth. Many would be focused on non-farm payroll but there was more important data leading up to that
You can read that Substack here: https://open.substack.com/pub/stayvigilant/p/labor-day?r=11qyxj&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true
Yesterday, the mkt was hit with news that growth looks to be weakening more than expected. The ratio of new orders to inventories collapsed in the ISM report which was even more negative than the headline number that was also weaker than expected
From the release: "The combination of falling orders and rising inventory sends the gloomiest forward-indication of production trends seen for one and a half years, and one of the most worrying signals witnessed since the global financial crisis"
WOW. That's some bearish sounding news there. How did the market take it? Well we know the answer to that - not well
The chart today shows the Nasdaq futures are resolving their condition to the downside. Entering the week, futures sat right on the trendline & in the cloud, as you can see in the circle on the top chart, that has given way
In addition, in the middle panel, you can see the MACD rolling over and heading lower suggesting a change in trend is afoot. The lagging span highlighted in red is still holding above support. If that gives way, look out below
How low could futures go? Just looking at the move from the October low to the July high, and measuring the Fibonacci retracement, we could see a correction into the 16750-17500 area, a move of about 10% from here
The market is super sensitive to this price action because it knows September is seasonally the worst month of the year for stocks. So when the first trading day resolves the technical to the downside, you can guess that people are aware
There is still other data this week that could show the ISM data was misguided. I personally put a lot of weight on ISM and its components. Others put more weight on things like NFP. That's what makes a mkt
Either way, the mkt is in a precarious spot at the moment, so it is best to tread very lightly. If you are getting involved, make sure you have tight risk management regardless of the side you are on
Stay Vigilant
#markets #investing #finance #downside #correction #stayvigilant