As the record height rises, coronavirus cases in the US have exceeded 3 million. Dr. Anthony Fauci, the country's top infectious disease authority, has warned of comfort in the "false story" of a declining death rate – contrary to the apparent optimism of President Donald Trump, some of his top officials and some governors. Meanwhile, ICUs in 56 Florida hospitals – which have seen a record number of new cases – reached their maximum capacity.
Cleveland Federal Reserve President Loretta Mester warned that economic activity in her area is slowing. Both the IMF and Goldman Sachs have recently taken an ax to their forecasts for economic growth in the United States this year. But as unemployment benefits lapse for more than 19 million Americans this month, we'll begin to see data deteriorate.
Yesterday, the technically heavy index scored a new all-time high but was pulled out by the end of trading.
Daily NASDAQ Technical Chart
Just before someone dies in a horror movie, there is usually a moment of optimism. He discovers an escape route. The audience gets their hopes and then the serial killer gets the teenager. That may be what happened yesterday.
Bulls saw Monday's strength and had confidence in the easy picking. Only then did the tide turn and they ended the day hungry and licked their wounds. Tuesday's trade created a pattern of shooting stars, which can be summed up as a reflection of false hope. Bulls tried, but were pushed back and forced to withdraw. The fact that it happened after a widening gap also puts the NASDAQ on an island reversal.
For clarification, the index is still very much in an upward trend. However, the previous congestion has shown for more than a month that the picture is not clear, which increases the chance of a corrective dip. The outbreak that followed may have been premature, as it was built on a set of stronger than expected data. Some may have misinterpreted the numbers as nothing more than a bouncing cat after the worst recession since the 1930s.
The RSI caused several negative deviations. First, the lows were flat and did not support the rising lows marked by the price. Second, it didn't return to its own recent record highs, as it had found resistance at the June 23 peak. Overall, the NASDAQ may form an H&S summit, suggesting a price reversal that will track momentum indicators lower.
Trading Strategies
Conservative traders would wait for a withdrawal to provide evidence of accumulation and
Moderate traders would go long on dips to perhaps the psychological level of 10,000.
Aggressive traders may risk a short and go down the correction.
Trade Sample – Aggressive Short
Registration: 10,420 – during a rally
Stop-Loss: 10,520 – above all times
Risk: 100 points
Target – above psychological round number
Reward: 400 points
Risk-return ratio 1: 4
