Nasdaq futures are staging the ultimate retest as the market is now 500 points from testing major resistance of where the market failed during the dot com bubble. By taking the low of the last major correction at 281775 (May 2013), using the January high of 362525, and the last recent low of 3412 made February of this year as the market’s attempted to breakdown only to fail, this gives upside fib extension levels of where the market can lead to. Thus far we have seen the market extend 38.2% at 3724, being where and what the market is working on now. Continuation of holding above the early 2014 high of 3635, this gives room to continue the squeeze higher as shorts capitulate. A 50% fib extension is met at 3821, followed by 3858 to complete the range expansion from 3635-3412 up to 3858. MAJOR resistance is met within 3900-4230 as the top level of the fib extension, being a 100% extension of the failed breakdown this year from last year’s move up. The first test of this range, should be sold with both hands forward, as this is the first test of the dot com bubble.
The SP500 completed its 1441 target and squeezed into its next major resistance being 1468, tapping it on the button as buyer exageration and short squeeze above 1441 led the market into this next level. Thus far, the market saw consolidation off 1468 in attempt to build a base down to 1443, however buyers ran out of gas as the market reversed Tuesday as they attempted to test the upper 1450s and fell to take out this 1443.50 level. This has the market now testing an important support range within 1437-1421 as lows of 1424 were made today, fighting to hold the 1421.50 low made September 11th, being the pivot low prior to the run into 1468. Below this level comes 1410-1394.50 being the pivot low made on the 4th as the market made a failed breakdown and ran from this into the 1468 level. This level could be the target for this move to squeeze out dip buyers and back and fill into this level. Should this take place, 1385 comes in as next major support on the downside that we must look for the market to test and attempt to hold to offer oppurtunity to reload. There are many eager buyers who want to come in as the market retraces its FOMC move higher, moving down into where this leg up began at 1394, would certainly hurt these buyers.
Risk disclosure: Past performance is not indicative of future results. The risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. An investor could lose more than the initial investment.