Buyer beware
The markets put up another resilient showing on Wednesday to tread the upper resistance levels without any signs of letting up. However, it has to be said that I still do not think that the market is poised for another leg up at this point. A pullback is all but overdue and my concern is the vertical form that this rally is taking as well as really overstretched technicals and overbought levels. In fact I have already mentioned it since last week so it is indeed surprising to see this rally continuing without any meaningful pullback.
The levels mentioned earlier of 4605 above and 4450 below still holds. In fact I believe if 4500 is breached, a correction will swiftly take place. Institutional action on the QQQ as well as the QLD are making me more cautious. We have had some of the largest trades in QQQ's history occuring on this leg up which I am counting as the final fifth wave up, to be exact 20th, 33rd, 36th and 30th in that order. We can't tell if those are buys or sells yet but upcoming price action will be telling. However it does seem like distribution to over exuberant retail parties very classical of ending fifth waves. This will be negated if the market gaps and go veryically up from here which will mostly indicate the institutions were buying rather than selling. Which makes the situation a buy the dip with the floor at the high trade levels mentioned. But at the moment, with all the technicals and bullishness in the market, I am leaning towards a sharp pull back on the horizon.
To add to this, QLD last night saw the 12th largest trade in its history at the highs. So I am not taking any risks at these levels seeing all these price actions. I remain ultra defensive and cautious and will remain so unless 4605 gets taken out on heavy volume which will negate the bearish crash setup that I am monitoring.
Disclaimer: Please kindly do your own due diligence as this is a sharing article and in no means financial advise. I am just sharing my opinions and thoughts.
Thanks for reading my commentary. Hope it helps!
Stay safe! 😊
$Semiconductor Bull 3X Shares(SOXL)$
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I appreciate your level-headed approach in this overheated market. Do you have any advice for staying rational and avoiding FOMO in these situations?
Your analysis is spot on! Do you think the upcoming pullback will be significant or just a small correction?
I'm with you on the caution. The market has been on a wild ride and it's better to be safe than sorry.
market already overpriced in 6 cuts. SP, NASDAQ, DOWN and SEMI have formed wedges with strong top resistance. Reversal will be here and is quite normal for a healthy market.
We are doing good this is how we going to $31 Strong!!!
Perfect set up for a run to $35. xmas time run up
Next week is Xmas $35 coming!!!
Extremely Fomo here, be careful all traders.
Semi index up 30% in 6 weeks !