I hope everyone had a great weekend. I’ll keep it brief as I am still away, but keep in mind that if there are any important changes, like a break of critical resistance or support I will update here .Friday was a pretty wild day for the markets. QQQ Broke, both the 20 Day And 50 Moving averages on Friday and SPY followed. QQQ closed down 1.71% at 370.81. we have support just below at 368.34, 365.90 and 361.80 resistance comes in all the way up at 374.80 and if we get another high volume sell off like we had on Friday we could break 361.80 and if that were to occur, look out below.
We are in another Bounce Or Die Situation.
over the past 12 moths we have had numerous “Bounce Or Die” situations, where, if we did not
bounce we were either going down another 10-12% or we were going up on the way to blue skies.
Each time the Markets led by Big Tech moved significantly higher before hitting resistance. I believe if you follow price action, we are on the way down, breaking the pattern of this miraculous bounce off support each and every time. I am a technician but nobody can ignore that the Financial News Networks
tell us inflation is under control while Powell and the Fed are o a missio to crush inflation and they will not stop. The Fed is also getting ready to implement Quantitative Tightening.(see below)SPY closed down 1.2% on Friday after we got the Heisman at the intraday support Zone of 447.50 closing below the 50 Day Simple Moving average at 443. The back half of September is typically pretty volatile, and it looks like there is a good possibility we make it down to critical support at 430.Spy has resistance back at the $447-448 Zone and if we break to the upside on big volume And the bulls are able to regain momentum we could be on our way to new highs. I believe the Bear has taken a pretty signifigant bite out of NASDAQ Big tech as expected and we will trade lower in the short term on both QQQ and SPY.
We are still short the QQQ, NVDA and TSLA. Watch the important support and resistance levels I have laid out and listen to the price action. Stay nimble and I suggest having a plan for both scenarios, bull and Bear.Just to update whats going on with the Federal Reserve and QT Although I am primarily a market technician and I use my proprietary Dark Pool algos, I think it is very important to see how the federal reserve is to our entire financial system. I have provided Wikipedias description of QE and QT in the paragraph below my usual Stock market summary just below.
What Is Quantitative Tightening (QT)?
Quantitative tightening (QT) refers to monetary policies that contract, or reduce, the Federal Reserve System (Fed) balance sheet. This process is also known as balance sheet normalization. In other words, the Fed (or any central bank) shrinks its monetary reserves by either selling Treasurys (government bonds) or letting them mature and removing them from its cash balances. This removes liquidity, or money, from financial markets.1
It is the opposite of quantitative easing (QE), a term that has become ingrained in the financial market’s vernacular since the 2008 financial crisis, which refers to monetary policies adopted by the Fed that expand its balance sheet
Have a great trading day tomorrow and I expect our regular Wednesday night market breakdown will be out by 11pm on Wednesday September 20th.
G. Allan Collins