Now, the catalyst for this past week's sell off in us equity markets has been the weaker than expected non farm payroll numbers, which give rise to the fear of a recession in the states. Now we want to be watching this carefully because September has never been friendly to global equity markets. Would it be history replaying itself? Watch out for what I'm going to share with you in the following. I'm going to reference the micro e mini Nasdaq 100 to give you an example.
Speaker: Daniel Ang (Sophisticated Trader with 30 yrs exp)
Subtitle:
Today is Sunday,September 8,2024. I'm doing this short video clip basically to give my viewers a sense of what I feel may be happening in the days and weeks ahead after what happened in the past week. Now, just to backtrack the first week of August, remember we had a mini sell off in global equity markets in the first week of August. We saw the S&P500 lost 4.25% in that week. The Nasdaq Composite lost six point. But the worst happened in Japan where the Nikkei 225 fell more than 12% in that one week.
Now this past week also the start of a new month for September. We saw S&P 500 closest to weak down four and a quarter percent, same magnitude.
And the Nasdaq Composite also fell 6.12%. Not as bad as in the first week of August, but almost the same. And this gives rise to the idea that the market may be looking at further downside. Now, the catalyst for this past week's sell off in us equity markets has been the weaker than expected non farm payroll numbers, which give rise to the fear of a recession in the states. Now we want to be watching this carefully because September has never been friendly to global equity markets. Would it be history replaying itself? Watch out for what I'm going to share with you in the following.
I'm going to reference the micro e mini Nasdaq 100 to give you an example of what I feel will be happening in equity markets around the world, specifically the us equity markets. Now they all have very similar structure, whether you're trading the Dow or the S&P500 or the Nasdaq100. Now the Dow is a little bit different, but I think the S&P500 and the Nasdaq 100 do have very similar price action here.
In the weekly timeframe you can see that the pandemic low was 6628.2 and the high is 20,983.5.Now this unfold in a three wave pattern which hit equality at 20,623.25. We had an equality move in a three way fashion, suggesting that this is a more of an end of a move. This could be a temporary top of 20,983 and a half. What follows here is, could be we are moving into a corrective pattern. And we saw that in the first week of August where the market came off quite sharply to a low of 17,346 even now.
This is basically the September contract here. Just to give you the idea. The larger time frame has finished a three way equality rally followed by a top up.
And we probably will be seeing some more pullback in the near term. Okay, now I'm going to show you the daily timeframe. Now, the daily timeframe, we will see very clearly that this moves downwards from the all time high at 20,983.5 is pretty sharp. And we have that rebound for three weeks after the August 5 low of 17,346, even to a higher of 20,000 or 25 and three quarter. So this week is, again, we see similar pullback. And this gives rise to the idea that this is part of a three wave pullback here, targeting anywhere between15,530 to 16,388. So do watch out for this bracket of prices here shaded in red. Okay?
So in the meantime, we can see that the closing on Friday was pretty sharp at 18,458 and a quarter, although the low was 18,337 and a quarter. So this gives rise to further downside risk going into at least next week. Now, the catalyst next week will be the data that we want to pay attention to will be Wednesday CPI numbers. The headline CPI year over year is expecting to dip from 2.9 to 2.6. So we can see that that is the expectation. If that is the case, we probably will see some volatility on that particular day, which is Wednesday.
So now, going down to the lower timeframe on the 4 hours, you can see that the one area that we will have to pay attention to is basically this level over here, because there is no low risk trade setup available. But here we can see there's a pivot...
Watch the video to learn more.
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