On Friday, the Nasdaq 100 (NQ) experienced a downturn after making a sharp reversal from its peak earlier in the U.S. afternoon. As we observe this, it’s noticeable that January’s highs and lows were lower compared to December’s, casting doubt on whether February will challenge January’s highs. While this suggests a trend, it’s essential for those bearish on the market to see NQ dip below last Monday’s low—a scenario that seems moderately possible, given Friday’s strong reversal. The pattern of a January Gravestone reversal, combined with an early February Doji, hints that NQ might have reached its peak for the major bull market run starting in late 2022. As we move forward, prepare for heightened activity on Monday with the U.S. ISM manufacturing PMI report, followed by Tuesday’s JOLTS job openings data. Mid-week brings the U.S. ADP Non-Farm employment change and ISM Services PMI, then a look at unemployment claims on Thursday, and wrapping up Friday with key figures such as average hourly earnings, the non-farm employment change, and the unemployment rate.
Looking at the weekly, daily, and 4-hour RSI, Stochastics, and MACD indicators, there’s a clear sign of exhaustion or a steady decline. I’m considering a short position in the red zone on the daily chart, aiming for the green zone by Friday. If I were a swing trader, I’d consider placing a stop in the amber/yellow zone. Personally, in accounts where I don’t hold positions overnight, I tend to set my stops a bit tighter.
