Stock Rip, Then Dip, In Yesterday's Rapid Afternoon Reversal
Michael Kramer | Jul 14, 2020 04:12AM ET
Stocks reversed lower yesterday in a somewhat violent move, and if you were hoping for a breakout, you got it, and then it failed miserably.
The Nasdaq 100 had been up by as much as 2% but managed to finish lower by about 2%, a nasty 4% intraday swing. Also, we finished at the lows of the days as well. Usually, that is not positive. Neither is the VIX being up all day, despite a big market rally. The sell-off came around the time it was announced California was shutting down indoor activities.
Now earnings season starts today. It may get interesting here.
h3 NASDAQ /h3So what happens next? I tend to think the Nasdaq is still overbought by a lot and that it needs to fall to the other side of the trading range. What happens after, we will find out when we get there. There is still a considerable distance the QQQ could fall from here. The first level I would look for is at $251, and then after that somewhere around $247. It would be about 5% from the closing price Monday.
Meanwhile, I would think the next meaningful level for the S&P 500would come around 3,115. The index pretty much failed at resistance around 3,230, which also happened to be the prior high in June. Now we have to worry about the potential for a double top pattern, but we have some time to worry.
Meanwhile, the VIX jumped by 18% to move back above 30.
The 10-year is once again moving lower and is at a critical spot. If the 10-year keeps drifting, we could see it back 55 basis points, and that is not good for equities.
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Amazon (NASDAQ:AMZN) broke its little uptrend, and that could suggest the share dip back to $2,900, potentially even $2,700.
Square (NYSE:SQ) fell sharply yesterday, and the stock can’t afford to drop below $118; if it does, it likely means it retraces back to $103.
NVIDIA (NASDAQ:NVDA) finished the day in a precarious spot; it most certainly doesn’t want to go below $400. If so, the next stop is at $380, and completion of the rising wedge pattern.
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