NASDAQ Composite (.IXIC) escalating trade tensions
Stocks wiped out gains Monday as escalating trade tensions upended an earlier technology-fueled rally, adding to fears about rising rates and signs of slowing growth that have battered global markets this month.
Bloomberg reported President Donald Trump is preparing to place tariffs on all remaining Chinese imports if proposed talks with Beijing next month fail. That came hours after the World Trade Organization was scheduled to hear a complaint Washington filed against Beijing, accusing Chinese companies of violating international intellectual property rules.
The Nasdaq Composite eliminated earlier gains and fell 1.63%, with Netflix (-5%) and Amazon (-6.3%) among the biggest decliners, after the UK rolled out plans for a digital-services tax expected to target large technology companies. Treasury Chief Philip Hammond told lawmakers the new policy would bring in £400 million, or $512 million, each year.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 7,674.68.
The projected upper bound is: 7,333.62.
The projected lower bound is: 6,736.33.
The projected closing price is: 7,034.97.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NASDAQ COMPOSITE), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 30.5252. This is not an overbought or oversold reading. The last signal was a buy 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 31.11. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 2 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -162.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 9 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 18 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -116.920 at 7,050.292. Volume was 27% above average (neutral) and Bollinger Bands were 136% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 7,377.28 7,801.75 7,518.92
Volatility: 41 25 23
Volume: 640,465,792 579,146,432 537,796,928
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE is currently 6.2% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .IXIC (mildly bearish). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 17 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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