26 July (Tues), Evening summary

This trader’s attention has been focused of late on E-mini NASDAQ 100 futures (/NQ) as in the last few sessions the contract is consistently outperforming its peer index-tracking futures and, in a YTD chart with daily bars, seems poised for an upside break.

First, some brief commentary on the chart, an analysis that complements the written and graphical musings expounded in the 22 July evening summary. Please refer to the chart below.

/NQ, daily bars:


A notably bullish indication of the recent past occurred in mid-July when a brief downtrend in /NQ failed to reach the lower trendline (which connects the lows of mid-March and mid-June), instead halting in the 2325 vicinity. The price then roared back, not only retesting the upper resistance trendline, but also setting an incremental new high. The quickness of the upper trendline’s retest is also significant; the previous 2 tests were spaced some 2.5 months apart, while the current assault comes but two weeks after the last. Finally, the appearance of the last three candles as so-called dojis (meaning that the open and close is nearly identical) indicates that bears are unable to overpower the bulls, despite price action being at a purported resistance level.

This trader’s hypothesis is as follows: /NQ will continue treading water at this level – a few more dojis are in store – with a fresh bullish leg coming next week on news of a debt ceiling deal. For surely some deal will come. (If there were indeed non-negligible risk of a deal, Treasuries, the USD, and gold would be making bigger moves right now.)

To offer a quick bigger-picture summary, here’s how the indices ended today’s trade.

It was a marginally negative day across the board with another interesting instance of divergence between the DJIA and NASDAQ. The broad-market S&P 500 surrendered 0.41 percent, while the DJIA and NASDAQ shed 0.73 percent and 0.10 percent, respectively.