The NASDAQ 100 chart put in a topping tail yesterday. Topping tails are bearish reversal signals. The NASDAQ 100 is up 58% since the March 2020 lows, one of the greatest rallies in history. Money flow has been charging into the stock market because of the Federal Reserve free money policy as well as new investors who would normally gamble on sports or in casinos. The ‘no lose’ market has lured in the baker and the candlestick maker. Ultimately, every analyst and market guru knows there will be a pull back, but not until the music stops. Fundamentals and technicals mean little in this environment when momentum and greed trump all. Again, this will end and likely be nasty but all we can do as chart technicians is look for the signals and follow-through.
The NASDAQ 100 chart has a defined topping tail in place. This is a possible top as long as the NASDAQ 100 does not close on the daily chart above the topping tail high of $260.88. To confirm the top, the NASDAQ 100 chart must trade and close one of the next few days below the low of the topping tail with significant volume. Should that happen, a downside sell will likely take the NASDAQ 100 chart to a level of $237.00.
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