Friday Could Be Make-or-Break for Nasdaq

That's as Big Tech continues to disappoint.

Big tech is whiffing pretty hard right now. AMZN fell 20% at one point in after-hours trading, but the stock stemmed its bleeding and ended the after-hours session lower by “just” 12.7%. AAPL fell 6% or so at one point, but finished higher by 0.4%. 

We’ll see how they handle the 9:30 open — it will probably be a make-or-break session for the Nasdaq, as it teeters on support. 

Big Tech was 0-for-5 heading into Apple’s print (which is usually released around 4:30 pm ET). That’s as TSLA, GOOGL, MSFT, META and AMZN all disappointed investors. Apple appeared to do the same, before it bounced after the conference call. 

However, despite the weakness in Big Tech, the stock market is seemingly shrugging its shoulders. Maybe it’s month-end buying that’s masking the pain, but even the bears have to admit, the action is impressive. 

The S&P is holding up okay, but the Nasdaq looks vulnerable. As for bonds, well, consider this:

“US Treasuries annualizing 23% loss YTD, worst since 1788 & 2nd straight annual loss; last time 2 straight years of UST losses...1958-59, last time >5% UST loss followed by -ve return...1861; last time 3 straight years of US government bond Treasuries...never; 250 years of history say US Treasury returns up in 2023.”

Technical Edge — 

• NYSE Breadth: 52% Upside Volume

• Advance/Decline: 55% Advance 

• VIX: ~$27.50

Two things: 

1. Continue to keep an eye on the US Dollar and bonds. The former has a potential long setup and the latter is nearing resistance (again). Now if bonds continue to push higher and the dollar fails to hold support, the S&P can have more fuel to the upside. 

2. Please look at the relative strength list below, as energy and healthcare names continue to propagate at new multi-month or 52-week highs. They are showing the most strength right now and remain the best stocks to build setups off of, IMO. 

S&P 500 — ES 

A bit of a mixed bag right now as the ES continues to put in a series of higher lows and is holding trend support via the 10-day ema. 

That said, keep an eye on 3815 to 3825 — that’s the 50% to 61.8% retracement zone and includes the key 3820 pivot. 

Above that opens the door to the 50-day moving average near 3850. 

If ~3820 is resistance, the Globex low remains in play near 3775. Below 3775 and yesterday’s after-hours low of 3757 is on the table. 

S&P 500 — SPY 

Right now, we are getting a pretty clean rejection from the 50-day moving average. If we get a continued pullback, it’s still a pretty healthy setup depending on where and if support shows up.

1. The first area I’m watching is $375. That’s the 50% retracement of the recent range and the 10-day ema. 

2. Second area is the 50% retrace of the range from yesterday’s high to the 52-week low. It comes into play near the 21-day — around $368. 

So simply put, I want to see if ~$375 holds as support. If not, I’ll be watching ~$368. 

Those short from yesterday can use a break-even stop and have hopefully scaled out of some. 

Nasdaq — NQ

10,890 to 10,935 has been critical support. 

Longs need to defend this level. A break is bearish unless reclaimed. 

On the upside, longs want to reclaim 11,225 to 11,275 (which is Thursday’s close, along with the 10-day and 21-day moving averages). 

Nasdaq — QQQ

Keep a close eye on $266 to $269. This zone was key support last week. If the pressures of Big Tech breaks this area, then $260 or lower could be in play. 

Oil — CL 

We haven’t talked about oil in a while, but it’s been trading much better lately and we’ve noticed that with our nice win in the XLE. 

Remember, oil can be tracked in the futures via /CL and /QM or via an ETF like USO. 

On the chart above, notice how CL put in a higher high (the purple circles) and a higher low (the green circles). This is constructive price action. 

Now I’m wondering if we get a dip into the $86.50 area, where we would get a test of the 10-day, 21-day and 50-day moving averages. From there, a move back into the $89 to $90 region would warrant a trim, followed by $93 to $94. 

Now this instrument is no joke and should not be traded by a novice. The risk could be fairly tight, especially if the $86.50s hold as support. Or it could be incredibly loose, like watching for a break of $81. Size accordingly or stay out.  

Go-To Watchlist

*Feel free to build your own trades off these relative strength leaders*

• Numbered are the ones I’m watching most closely. 

• Bold are the trades with recent updates. 

• Italics show means the trade is closed.

Open Positions

1. XLE — Took the last rung of the latter into the $90+ zone. Trade closed unless you want to leave a runner.