In this week’s issue of Market Slice, we delve into the bull market and discuss if it is really coming to an end. We also announce an upcoming webinar!
NASDAQ Signals Double Top Formation
2022 has been a rough year for the NASDAQ.
Since January, the bellwether tech index has shed nearly 2,000 points, or roughly 12%.On January 4th, the market opened near 16,500, just a shade below the all-time high. The next day, the NASDAQ broke below the 50-day moving average… and it hasn’t looked back since.
We often caution traders that trying to time tops and bottoms in a fool’s errand. Usually you either end up getting whipsawed out of your positions, or find that your forecast was wrong, as markets continue the trend.
The problem with calling tops is that you need data to support your conclusion. Otherwise, you’re just guessing.
Now, however, we have some confirming evidence that the top is in, and the market is heading south.
This is a 6-month daily chart of the March ’22 NASDAQ E-Mini contract. Notice the line across the top… this is the double top that we pointed out in the S&P 500 in our Dec. 15 issue. At that time, we could only warn that this was an indication of a potential downturn.
The price action since New Year’s confirms the downtrend indicated by the early January failure to break through the 16,500 level.
Now let’s look at shorter-term developments. Notice the small red line on the right side of the chart above. This is a 4-hour chart covering the past month in the same Mar. ’22 E-Mini contract.
As you’ll note, the red line we saw above represents a downtrend in the month of February… from an intermediate (rebound) high around 15,250, the downward slope indicates the trajectory formed by the lower high formed between Feb. 7th and 11th.
Even as the market bounces at the time of writing (14,620 on Tuesday’s close), we can see that the NASDAQ is still substantially short of this line… and that’s with the Stochastics moving toward overbought territory (bottom section).
The weak volume (vertical bars) driving this week’s anemic rally is another warning sign to bulls. There is a lot of evidence that this bull market has run out of steam.
Want to get better at technical analysis? FFR Trading has a team of Strategists who can connect you with the best teachers in the business. Why try to figure it all out on your own, when even a small mistake can lead to big losses? call (800) 883-0524 , or click the Calendly link, to schedule a free consultation call!
Late to the Party?
Speaking of bull markets, have you seen Crude Oil lately? In the past year, crude has gone from around $50 a barrel to over $90… an 80% run-up.
We mentioned commodities back in September, specifically looking at oil and pointing out the bull trend we saw unfolding.
At that time, the one-year chart showed a run from $42 to $70. How many traders took our advice and jumped on the crude bull? And how many thought, “Oh, never mind, I missed the move”?
If you’d gone long in crude in September, you’d still have a 30% gain in hand.
This is one important characteristic of a “super-cycle,” such as we are seeing now in many commodity markets. In a super-cycle, price do not go up and down… they just keep going up, with only short “breather” declines.
And unlike equities, where the huge increase in stock prices has been driven by fiscal and monetary stimulus, this commodity super-cycle is grounded in real-world economic activity. Of course, inflation is still a factor, and if you think inflation is about to end, you might be concerned about going long in the futures markets. There are several good reasons not to expect a sudden decline in inflation, though. We’ve covered that in past issues, too.
While the Fed is desperately trying to balance the inflation threat against a sudden market crash, the simple fact remains that there is too much money in the economy and too much demand to reverse the upward trend in commodity prices any time soon.
What this means for oil traders is that we are most likely not yet near the top in prices. While a near-term decline in prices is possible, the upward thrust of oil prices is likely to continue.
With Crude Oil prices headed to $100 and beyond, It’s not too late to get in on this super-cycle party!
Remember, diversification is one of the key elements to balancing your investments and reducing painful drawdowns. Especially if you are heavily invested on the long side of the stock market, it makes a great deal of sense to think about incorporating a futures trading strategy into your portfolio. Call FFR’s Strategy Team at(800) 883-0524 for a no-risk assessment of how commodity trading might fit your trading goals.
Take Your Trading to the Next Level – With Our REAL-TIME News Event Trading Workshop Scheduled for Next Week!
If you buy gas (who doesn’t?), you’ve probably noticed the real-world impact of rising oil prices! Rumors of war in Ukraine? Stock prices tumble. Emergency Fed meeting? Oh no! Gas prices going up? Take your pick…
Talking heads on the financial news are always blathering about what causes this or that economic development. The reality is both simpler, and more complex, than certain blowhards might lead you to believe.
On the other hand, smart professional traders do trade news events. And they do so very successfully. It has nothing to do with watching CNBC or Fox Business or Bloomberg. Those outlets are actually designed to mislead you with manufactured “talking points” or sound bites that serve the corporate interests behind them.
Here’s the plain truth: if you want to trade news events like a pro, you have to learn the “insider” methods used by professional traders. Next week, FFR Trading is proud to present REAL-TIME News Event Trading with Ian Cooper!
Watch as Ian dissects today’s news events, and shows you exactly how to place winning trades, based on his proprietary news cycle analysis. This will be an interactive event… questions and group participation are encouraged. This on-the-fly workshop will feature actual real-time analysis and live trade entries.
Ian Cooper is a 30-year trader who has helped traders grow and protect their wealth since 1999. Cooper makes use of technical, fundamental and news analysis, to identify exceptional trade opportunities. He’s a firm believer that hard work and thorough research will lead to investment success. You don’t want to miss this dynamic live workshop! Pre-registration includes a free copy of Ian’s News Event Trading Strategy Guide.
SPECIAL ALERT: A bonus three-month subscription to Ian Cooper’s “Weekly Live News Event Trading Master Class” will be offered to all attendees who stay for the entire webinar.
Don’t miss your chance to meet this trading legend and gain his best insights!
Join us on Wednesday, February 23rd, at 4:30PM EST.
We look forward to seeing you on the webinar!
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