by Chris Vermeulen of The Technical Traders
Almost all of the US and global markets volatility has taken place over the last 6+ trading days. Even though economic data continues to show a strengthening US economy and jobs market, other news has spooked the global markets. I’m going to illustrate how the markets are nearing critical support levels that are a “Do-Or-Die” level for the market, in my opinion.
Let’s get right into the charts – shall we?
NASDAQ SUPPORT NEAR $15,721 SHOULD ACT AS A SOLID FLOOR
This NASDAQ chart highlights the orange support level near $15,271 that I believe will act as a HARD FLOOR/SUPPORT for the US markets. We may see $14,750 become the next downside target level if the NQ falls below this level on strong selling. If this support level holds, then I expect the US markets to resume a rally trend and attempt to target $17,000 or higher before the end of 2021.
CUSTOM US STOCK MARKET INDEX CONFIRMS SUPPORT NEAR $15,721
This Custom US Stock Market Weekly Chart highlights the key support channel that originates in early 2021 and spans across recent lows (the DARK BLUE LINE). My opinion is that the alignment of the $15,721 support level from the chart above and this key support channel on the Custom US Stock Market Index chart creates a confluence of critical support. This level becomes a “Do-Or-Die” level for the markets to attempt to bottom and recover going forward.
CUSTOM VOLATILITY INDEX SETS UP A DEEP POTENTIAL BOTTOM LEVEL
Lastly, this Weekly Custom Volatility Index chart highlights the multiple deep downside support ranges that have continued to drive future price rallies since the original COVID collapse. The current Custom Volatility Index level is below the last two pullbacks in the US markets and well within the support channel from late 2020 and early 2021.
This Custom Volatility Index would clearly show a breakdown in the US markets by moving below the 6.0 to 6.50 level on strong selling pressure. That is currently not happening, and I suspect the lack of real selling pressure reflects a panic selling mode – not a change in true price trend.
My opinion is the US markets will struggle to hold near recent lows – attempting to hammer out a bottom/base over the next few days. If these critical support levels fail to prompt a bottom in price, we’ll know soon enough. The markets can stay irrational far longer than many people expect.
The next 2 to 5+ trading days should clearly show us if these support levels and channels are solid or not. If the global markets are going to continue to move lower, we should find out soon enough.
If I’m correct and the markets do hold up near these support channels, we may begin to see a new “Rip-Your-Face-Off” rally phase to start a powerful Santa Rally closing out 2021. That would be incredible to witness and experience.
Watch for support near $15,721 to $15,750 on the NQ over the next 5+ trading days. I believe that level is the “Do-Or-Die” level for the markets going forward.
CURIOUS TO LEARN MORE ABOUT GLOBAL MARKETS?
Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are beginning to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely begin to act as a proper hedge as caution and concern start to drive traders/investors into Metals.
If you need technically proven trading and investing strategies using ETFs to profit during market rallies and to avoid/profit from market declines, be sure to join me at TEP – Total ETF Portfolio.
Have a great day!
Chief Market Strategist
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