After the Fed's comments in support of the U.S. economy and the transitory nature of the recent inflation, the NASDAQ Composite rallied to new all-time highs and closed at $15,167.75 on Aug. 5. If the markets fall back into the “melt-higher” mode as we move away from Q2:2021 earnings, we may be setting up for a moderately big rally phase targeting $15,400 or higher in the NQ.
Global Traders Continue To Bank On A Rally In U.S. Equities
Global traders have poured billions into the U.S. markets over the past 4+ years as the Federal Reserve has continued to act as the global banker of last resort. Because of this, global traders continue to invest in U.S. equities as the strength of the U.S. dollar and the incredible post-COVID rally in the markets has blown past everyone's expectations.
This daily NQ chart shows how the trading on Thursday, Aug. 5, rallied past the recent high levels to close at a new all-time high. The $15,000 level appears to be fairly strong resistance, but the NASDAQ has continued to be one of the strongest market sectors over the past 6+ months – continually pushing higher and higher.
Quite possibly, the NQ may be starting a new rally phase which may attempt to move upward towards $15,400 or higher.
We'll know soon enough if the NASDAQ and other major U.S. indexes are able to continue this rally phase. August and September are typically very volatile months for traders, but the Christmas rally usually starts in late September or early October as consumers start preparing for the holidays upon seeing Halloween decorations lining the shelves in stores.
The next few months may be full of volatility and big trends. There will still be endless opportunities for profits from these extended price rotations, but the volatility and leverage factors will increase risk levels for traders that are not prepared or don't have solid strategies. Don't let yourself get caught in these next cycle phases unprepared.