As I wrote in my very recent articles, I am an adherent of the bearish sentiment in America, and especially in its technology sector.
However, this does not prevent me from assessing the situation sensibly and acting on the basis of the market situation, and not from those emotions that are characteristic of bulls or bears that have taken root in their opinion lately. In other words, I am more of a bear in terms of the market, but speculative bullish positions bring a plus. Even if they are against my mood.
In the meantime, I want to draw your attention once again to what has been happening in the last two days on the Nasdaq exchange. In recent days, its index has shown a decline of 3.8%. In the scale of her growth, this is, of course, a trifle. In terms of the number of drawdowns and redemptions, it is the same.
At the same time, once again a fact has occurred that we traders should not ignore. And it is our duty to closely monitor the development of the situation. Let’s look at the graph:
This is the daily chart of the Nasdaq Index
Pay attention to the clear channel that has been formed since mid-September 2020. At the same time, the price has already gone beyond the channel several times up and down. She went beyond the channel down and now.
This is the result of trading over the past two days. Can the results of this attack indicate a change in the trend? Well, of course not. But what definitely needs to be done is to closely monitor the development of the picture. Why? Because in conditions of wild overbought, this very development can be very dramatic. And this will affect all markets without exception, and even more so on the Russian one.
Earlier, a few days ago, I wrote in my article that a reversal pattern has been formed on the Tesla chart, which has only been confirmed in recent days. I will give the graph that I was guided by:
I consider Tesla the most overbought company on Nasdak and I am sure that the downward movement will begin with it. So far, this opinion has been confirmed.
Conclusions on this note.
This fallout from the channel on the Nasdaq exchange can be redeemed again, and in this case, the signal will be false. But in fact it is. And any exit from such a quality methodically formed channel is a serious moment, and we should take it into account in our trading. This does not mean opening a short for all depots and blindly shorting everything on the bottom. But it is imperative to take it into account when working with a portfolio and somewhere to reduce, somewhere additionally hedged or take other actions.
With you was Alexander Perfilov, Head of the Strategy “Look to the Market” on the comon.ru portal
Subscribe to my telegram channel @perilov_investand you will know how to behave in the market in any situation. This channel has a PM, where you can ask any questions about the market, ask and consult.
Good luck and good to everyone!