NASDAQ breaking below YTD support

Apr 22

US stocks, led by mega cap tech companies and the NASDAQ writ large, started 2024 on a hot streak. But as momentum slowed, an arc pattern supporting the market became clear, only to be decisively broken. Analysis of key support and resistance levels provides price targets for the coming weeks.

Apr 25

Note

Volatile action post-market on Thursday means we may open Friday right around the arc level. If this is the case, prepare to enter into the short trade tomorrow!

Assuming we do get our first arc touchpoint, here is the rough gameplan I am hoping to implement -

First, I will buy put options for both the 5/14 and 6/6 targets (specific contracts TBD).

Assuming the 5/14 target is achieved, I will then buy a call option in anticipation of another arc touchpoint.

If we get that touchpoint, then I would add to my contracts for the 6/6 put option.

Apr 26

Note

We now have an almost exact arc touch, but be cautious here! I am waiting for a clear reversal to the downside as my entry signal.

Apr 26

Note

We have what looks to be a head and shoulders nearing completion on the intraday chart as heavy volume selling is coming in, with the neckline centered directly at the arc level. While there is risk here, and the pattern did not develop exactly as I would have liked, it may be prudent to open a starter position before markets close for the week.

Apr 26

Note

After trading much of the day above arc resistance, strong selling came in at close, and QQQ finished the week 28c below the daily resistance level of $431.28! This gives us a very strong touchpoint on our trendline.

The intraday reversal signal described in the above update was an opportunity to open a starter position, but in order to open a short position with a higher level of confidence, what we now want to see is a reversal signal Monday on the daily chart.

Apr 29

Order cancelled

Unfortunately, we gapped up above resistance at open. You should be able to close any starter positions that were opened Friday with minimal losses here.

May 1

Note

The April 29th candle does look to be a potential false breakout here. Not the cleanest pattern, as I would have liked to see stronger resistance shown here and then a false breakout on the third test of the arc. Nevertheless, April 30th saw a good plunge back below the arc, so the general path laid out in this idea may still play out, even if the arc resistance didn't quite hold.