NDX100 (Nasdaq) Rally Breaks 27%
What Has Happened to the Bears?
The NDX100 which tracks the Nasdaq has now reached a whopping 27.36 in its current recovery rally after reaching its low 6 weeks ago.
Has this rally caught you off guard? It sure has caught me off guard, I have been watching this rally since it started, thinking that it’s going to turn, it’s going to turn but that turn has still yet to appear! Last night’s extension was mainly driven by good news on the coronavirus treatment front with drug trials showing positive signs in reducing the time a person is infected by the virus. Traders wrote off a worse than expected US GDP figure. Earnings also played a factor for the Nasdaq as Tesla reported a profit and Google missed, but revenue surprised. Microsoft earnings rose 23% and Facebook earnings jumped 101%, as its revenue rose 15%. Monthly users jumped over 10% to 2.6 billion, I suppose lockdowns can be good for some!
Looking at the daily we can see how strong the recovery has been. Price breaking the 61.8 a few weeks ago and with one test moving well clear on the current leg.
The Weekly Williams %R has hit a reading of -1.16 – this is an extremely high reading and suggests that the price could have reached a short term point of overbuying. However, this is nothing more than a guide, we need to wait for price to confirm that extreme reading. Overnight the Daily Williams %R touched 0. If a pullback is close we will need to see price confirm that.
The SPX500 (S&P500) has also broken above the 61.8 Fib point but the US30 (Dow) has lagged and is currently still below the 61.8 Fib point. Traders that follow Fibonacci retracement will look at the 61.8 as the final point of a normal retracement. If price breaks that level it could be seen as a turn in trend, again these are guides and not set in stone.
As we can see below the US30 remains below the 61.8% point.
So the question now is how far can this go, is a new correction close to developing? Unemployment Claims is the next interesting piece of data to come, it will be released tonight during the NY session at 10:30 pm AEST. (8:30am EST) The market is looking for a decrease from 4427K to 3500K.