NASDAQ Composite (.IXIC) Trade War’s Getting Real

NASDAQ Composite (.IXIC) Trade War’s Getting Real

NASDAQ Composite (.IXIC) Trade War’s Getting Real

The most obvious losers in the stock market recently have been companies exposed to trade with China. Over the past two weeks, we’ve gone from cautious optimism about an imminent trade deal to the two sides seeming to be worlds apart. While the rhetoric ebbs and flows through the course of the day, it seems clear that this is going to be a lot more complicated and time-consuming to resolve than, say, the new Canada/U.S./Mexico trade pact that the three countries agreed to last year.

Until this month, however, the effect of the escalating U.S.-China tariffs had been limited. A few companies, such as industrials, were taking a hit as orders dried up. In general, however, the trade war has had a modest – at worst – impact on the U.S. economy. GDP growth is strong, unemployment is low, and consumer confidence remains elevated. This shouldn’t be shocking. China makes up just 10% of U.S. exports right now. Mexico, Canada, and the European Union buy far more from America each year than China does.

Now, however, things are changing. Washington has taken a more confrontational stance toward Beijing, particularly in regards to technology. In particular, the U.S. is threatening Huawei . The U.S. blocked Huawei from working with American firms before giving them a temporary exemption. Alphabet  (NASDAQ: GOOGL ) followed up on this by blocking Huawei from accessing future Android updates.

Not surprisingly, China has responded with threats to American tech companies including stopping exports of key rare earth minerals necessary for many modern technological gadgets. Semiconductor stocks have gotten pounded in particular, along with the QQQ ETF in general, as investors contemplate the risk of an extended trade spat that screws up supply chains on both sides of the Pacific.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 7,771.62.

The projected lower bound is: 7,316.31.

The projected closing price is: 7,543.97.

Candlesticks

A black body occurred (because prices closed lower than they opened).
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 25 white candles and 25 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 16.2487. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 20 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 34.34. 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 sell 20 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 -149.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 19 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed down -60.042 at 7,547.309. Volume was 2% above average (neutral) and Bollinger Bands were 40% wider than normal.

Open High Low Close Volume___
7,553.0227,581.1127,503.9447,547.309 579,478,912

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 7,719.54 7,877.68 7,527.25
Volatility: 19 19 26
Volume: 551,838,784 543,730,240 584,199,168

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.

Summary

NASDAQ COMPOSITE gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 0.3% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 13 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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