Chasing headlines is a tough way to go about trading strategy, and while the potential for development around what’s going on in the Middle East is scary from a few different perspectives, equity investors don’t look too perturbed at this point.
The initial reaction on the Sunday open was a gap-down but buyers put in a strong response, closing the Monday candle in the green. On Tuesday, sellers went for another rip, helped along by a strong rally in the US Dollar but that’s around when a trendline came into play on Nasdaq 100 futures that, so far, has held the lows.
The support zone mentioned two weeks ago remains relevant, as well, and as I had discussed going into NVDIA earnings, these pullbacks have so far been opportunistic for buyers to take on more exposure to tech stocks. The zone running from 24578-24721 has been well tested over the past few weeks. But, to date, sellers haven’t been able to leave that area behind.
Nasdaq 100 Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
Nasdaq Shorter-Term
At this point the move in Nasdaq futures is already well-developed and chasing the bounce can be undesirable from a risk standpoint. But – given the momentum, there’s now an open door for the short-term higher-high to lead in to a higher-low.
Ideally, that 25k level would see some element of defense, but realistically, the prior swing high at 24,850 or even the top of that longer-term zone could suffice, as this morning’s higher-low printed right around the bottom of the zone. Again, the level for that would be the 24721 level with 24578 serving as a form of invalidation on the long side.
Nasdaq Hourly Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
