It is easy to get so narrowly focused that one can miss the big picture. The big picture creating near-term predictability is simple. The markets have been in a trading range since October. Until it breaks out of it, it is likely to go near its previous high, then back down to the bottom of the range.
On Tuesday, Nasdaq 100 futures hits its July high, but not its more recent Nov/Dec highs, which does not bode well for the market, as lower highs indicates a bias lower when it does break out of its range.
In the meantime, Wednesday and Thursday’s sell-off brought it to the middle of its range, meaning it still has a ways to go to hit the bottom of the range. Here is the big picture:
On the right, you see 3 red candles. The third one is market futures since they opened today (Sunday) at 6pm. The drop really began at 8pm.
The upper yellow line is the July high it hit on Tuesday. The lower yellow line is the bottom of the range. If it breaks below that line, we’re looking a possible re-visit of August lows.
Here is a close-up of the drop today that began at 8pm on a 5 minute chart:
Anything can happen before the market opens in the morning. Yet, if you are positioned for increasing volatility or a drop in the market, you could do well this week.