Market Minutes: NASDAQ Relief Rally Mode
Deron Wagner | May 17, 2022 01:20AM ET
In last Friday’s MMM report, we said the NASDAQ bears could be losing control in the short-term. We also said that stocks could enter bounce mode if the major indices hold above Thursday’s closing prices.
Stocks indeed finished Friday’s session with solid gains, thereby confirming the previous day’s bullish reversal pattern.
However, given the vicious sell-off after breaking below major support levels, the S&P 500 and NASDAQ now have an abundance of overhead supply and resistance levels to contend with.
As such, we view the current bounce as an opportunity to look for new, lower-risk entry points for new short setups (and/or buying inverse ETFs).
If the NASDAQ can bounce into the 12,000 area, it will find plenty of resistance from a short-term term downtrend line and the 20-day EMA:
Until the market proves otherwise, we view any bounce as an opportunity to sell short—but only IF low-risk entry points emerge in weak stocks/ETFs.
As always, remember to trade what you see, not what you think!
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