QQQ - Do not forget we are still in the bear market
Yesterday, after the CPI print, the Nasdaq 100 index made a new low for 2022 before erasing all early losses and gaining more than 2%. New lows for QQQ marked approximately a 37.8%% decline from the all-time-high value, while for NQ1! this figure was close to 37.5%. As we stated previously, we expect the market to swing up and down ahead of the upcoming FED meeting. Therefore, we want to abstain from setting a price target, and instead, we want to stay on the sidelines and monitor the market.
We think it is essential to wait out the volatility and look for a better repositioning on the short side. In addition to that, we would like to see exhaustion among dip buyers and those predicting the market bottom while disregarding the macroeconomic factors. Accordingly, we stick to our bearish view of the U.S. economy and believe that the market is not done selling.
Despite that, we are very cautious as the market might be positioning itself for a continuation of the rise, which we expect to be short-lived. Furthermore, we expect the bullish hype to continue affecting other sectors of the economy, including cryptocurrencies. Though, we believe this dissolution will clear out with another interest rate hike by the FED and earnings season. Indeed, we think these events will strongly bolster our thesis about the second stage of the bear market.
Illustration 1.01
Illustration 1.01 shows the current setup for QQQ.
Technical analysis - daily time frame
RSI is pointing to the upside but has a relatively neutral structure. MACD and Stochastic are neutral. DM+ and DM- are bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Illustration 1.02 displays the daily chart of QQQ and shows it deep in the bear market territory.
Technical analysis - weekly time frame
RSI started to flatten. The same applies to MACD, and Stochastic strives to perform a bullish crossover. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
Illustration 1.03 portrays the section of the current bear market and particular bear market rallies within it. It should serve as a reminder of dramatic moves characteristic of the bear market.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
We think it is essential to wait out the volatility and look for a better repositioning on the short side. In addition to that, we would like to see exhaustion among dip buyers and those predicting the market bottom while disregarding the macroeconomic factors. Accordingly, we stick to our bearish view of the U.S. economy and believe that the market is not done selling.
Despite that, we are very cautious as the market might be positioning itself for a continuation of the rise, which we expect to be short-lived. Furthermore, we expect the bullish hype to continue affecting other sectors of the economy, including cryptocurrencies. Though, we believe this dissolution will clear out with another interest rate hike by the FED and earnings season. Indeed, we think these events will strongly bolster our thesis about the second stage of the bear market.
Illustration 1.01
Technical analysis - daily time frame
RSI is pointing to the upside but has a relatively neutral structure. MACD and Stochastic are neutral. DM+ and DM- are bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Technical analysis - weekly time frame
RSI started to flatten. The same applies to MACD, and Stochastic strives to perform a bullish crossover. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active:
High volatility continues to manifest itself in wild swings. Shortly before the FED meeting, we expect this volatility to drop as a reflection of hesitant market participants.
Trade active:
We update the short-term price target to 270 USD and the medium-term price target to 260 USD.
Trade closed: stop reached:
We abandon our price targets (temporarily) as it seems the market wants to continue a bit higher.
Trade active:
We (re)set price targets to 270 USD and 260 USD (for QQQ). Additionally, we set price targets for NQ1! at 11 000 USD and 10 000 USD.
Trade closed: target reached:
Our price targets of 270 USD for QQQ and 11 000 USD for NQ1! were reached yesterday.
