Nasdaq And Dow – Two Spectrum’s Of The Stock Market

Our researchers believe the NQ and YM chart illustrates a very different dynamic which is currently at play in the US Stock Markets. The NQ, the Technology heavy Nasdaq futures, appears to have stalled near the 75% Fibonacci price retracement level whereas the YM, the Blue Chip heavy Dow futures, has already rallied past this level and is setting up a “double top” formation near 26268. It is our belief that the US Stock Markets are already nearing an intermediate top rotation price area and that traders need to actively protect their long trades/profits right away. We believe a downside price rotation may take place very quickly over the next 5~10+ days and that the markets may rotate downward by a minimum of 4~6% in what we are calling a “momentum rotation setup”.

This first chart of the YM on a Weekly charting basis shows how dramatic the upside price move since December 24th has been. It also shows the current high prices are very near to the high price levels near the end of November 2018/early December 2018. We believe this “intermediate double top” formation will prompt a downside price rotation towards support near 24985 (or a bit lower). This represents a -5.5% price rotation and will likely frighten a few long traders. It will also embolden the shorts to start to power back into the markets expecting “This is IT! – the Big One”.We believe this downside price rotation will become a very healthy moderate downside price swing that will revalue equity prices, re-establish support and prompt a new upside momentum move that may eventually break all-time highs later this year. In other words, we believe this rotation will be an excellent buying opportunity for skilled traders. We show our volatility VIX setup forming here.

(Click on image to enlarge)

This next NQ, Nasdaq Futures, Weekly chart highlight the dramatic difference between the Blue Chips and the Technology sectors.Unlike the previous upside price swings, between 2016 to early 2018, where the Technology sector was the big gainer, this time it appears the Blue Chips and Mid-Caps are the strongest sectors in this recent move.

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As skilled traders, we urge you to properly protect your open long positions and prepare for this price rotation. Our team has 53 years of experience in researching and trading makes analyzing the ...

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