Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Is This A Fake Move In U.S. Markets?

Published 11/26/2021, 07:05 AM
Updated 07/09/2023, 06:31 AM
NDX
-
US500
-
DJI
-
NQU24
-

As US markets open in the midst of the Thanksgiving holiday season, it’s been a traumatic start to the end of the week, with all three indices trading sharply lower, with the Dow Jones falling over 1000 points at the time of writing, with an equally dramatic move on the S&P 500 which has fallen over 100 points. For the NASDAQ 100 the move has been less dramatic, but nevertheless is following the sell-off, and is currently trading at 16,161 at the time of writing.

NQ-Daily-Chart

Again for regular readers you will recall my last post for NASDAQ futures contract entitled ‘Is Santa’s rally running out of steam? and perhaps the answer to this rhetorical question as we consider the charts this morning, is that it certainly seems to be the case. The question of course is whether today’s market swoon is simply a knee-jerk reaction to the latest pandemic news or a more serious structural fracture before we witness a longer-term reversal in sentiment.

This is too early to say as in the past we have seen dramatic V-shaped reversals, so it’s a question of being patient and waiting for the volume to confirm today’s price action and see what unfolds in the early part of next week. Often during holiday periods, we do see the market makers develop trap moves on low volume and low liquidity, and is a classic move, so the closing volume for today will reveal whether this is a genuine move or fake. I suspect the latter but time will prove me right or wrong.

The weakness I highlighted on the daily chart for NASDAQ futures was the wide spread down candle with a deep wick to the upper body of Nov. 22. These are classic candles and when supported with good volume are the ones to search out in any falling market as they provide excellent re-entry points if you missed the initial move.

So in summary, given this is a holiday period, I suspect this is nothing more than a fake move designed to trap traders and investors before we see an equally sharp recovery. We will see!

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.