In yesterday’s blog post, I mentioned two points to watch on the Nasdaq 100 futures (/NQ), the blue downtrend line, and the yellow July high. After it initially bounced off the trend-line, it made a 2nd attempt and pierced it. Then, naturally, nothing was going to stop it from hitting the July high, with nothing in its way.
Consequently, nothing flew higher yesterday than the Nasdaq. As its 100 cash index, the NDX, gained 1.51% yesterday, the S&P only gained 1.06%, and the Russell 2000 managed to pull off a 1.07% gain despite being up only 0% around noon.
Looking closely at this chart going back to the 17th, with each candle an hour, you can see how it just raced to the July high after it cleared the trend-line. Once there, it slowed its ascent, only to finally gravitate back down to it, bouncing on it in after hours. Europe managed to pull it down below it some, only to let it bounce back up over it. This yellow line is acting like a magnet right now for the /NQ. Generally, we refer to these magnets as Points of Control (POC), where the bulls and the bears battle fiercely for who will run with the flag next.
This chart includes the Dec 17th high, so you can see how it created the blue trend-line and how it barely missed the yellow July high.
Note that oil dropped around 5pm yesterday on an inventories report by the API, and remains lower as I post, off about $1 after reaching 37.9. This could help put a damper on stock prices today.
The million dollar question today is will the Nasdaq 100 race higher towards its previous all-time highs, currently 4739.75 on NDX set 12/2, or will it drop lower, losing this support. It’s all time high is only 1.04% above its close yesterday, so it is certainly within striking distance.
To put it in perspective, here is the big picture daily chart for the past year of the Nasdaq 100 futures.