Nasdaq Short Opportunity
|June 23rd, 2015, 10:49 PM||#1 (permalink)|
New York 1001 USA
Futures Experience: Advanced
Platform: Boursorama, IG Market
Favorite Futures: Currency, oil, Index
Posts: 10 since Jun 2015
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Nasdaq Short Opportunity
Hello, this is my first post here!
I just copy/paste an analysis from my own blog, not quite complete and I will soon edit it but the idea is here!
I can't post image, that's kind of annoying, will edit as soon as I can
As I write those lines Nasdaq is at 5147. I recommend being SHORT, horizon: 2 days-2 weeks. Objective: 5000 at least.
Rally has overextended
Buying is loosing momentum
Big movement is ahead
Smart Money is exiting
Many different possible catalysts
Hey! I am really happy to present you my 1W1T (2). For the moment my two first recommendations (1W1T (1) and Secondary Trade (1)) are doing really well and I am super happy to be able to show you, right at the beginning of this blog, that I try to post quality analysis which happened to be true!
This week 1W1T will be devoted to one of my favorite kind of play, and I am pretty confident about it. This analysis will be mostly a technical one, but I will also try to strengthen my point with some fundamentals inputs. I consider that the current market situation in an obvious short opportunity on the Nasdaq, let me show you why:
(1) The rally has overextended. The graph is looking great for a short.
Nasdaq 5Y (stop at 06/19, but it doesn’t really matter)
The index has been on an uptrend for more than 7 years, reaching continuously new highs. But I don’t discuss the fundamentals behind this trend at the moment, my point here is to show you that any movement further could be quite difficult. On the other end, a correction, or at least a little pullback, is way more easier to forecast when reaching such high valuation.
(2) Buying pressure are loosing momentum
Zoom: Nasdaq 1Y
On this graph my point is more easily shown. You can notice that since May 2015, the new highs are closer and closer. The buying side is loosing steam and the conviction that the index will go higher is not as important as it was before. Bears and Bulls are in a tight fight.
(3) Big movement incoming – the Rate Of Change
rate of change Nasdaq
As you can see on this graph, this indicator (which measures the percent change in price from one period to the next) has been held between a tight range since 03/10/2015 to now. The market hasn’t experienced much volatility. As a result, one can expect a big move is going to happen soon. As I have explained you before, I consider the probability of it being a upward move is small. Moreover, the Nasdaq has not experimented any real correction recently. The October 2014 pullback didn’t even go beyond -10%. A sound market is to “breath”, and you can say here that the Nasdaq is pretty good at breath-holding, but for how long?
(4) Smart money is going out
This is one of my favorite indicator. What are doing people who have the better knowledge/information/experience. They are cashing it and we should play like them.
(5) Fundamentals reason for a short / Potential catalysts
-FED hike / FED declaration
-China slowdown / Bad economic data / Sell-off in Chinese equities
-“Tech Bubble” / Bad earnings / Bad news
I have no time to develop this two last parts today, I will edit it really soon, I just want to give my main ideas now.
What could go wrong with this analysis?
Good news from tech sector
Dovish FED comment