The Doomed Market

The stock market needs significant asset dislocations that reset the table. If Powell could push a button and, nothing else changing, oil drops to $50 per barrel, then we can talk about the market climbing up to test the 1929-2000 resistance line again. Otherwise, I see a seesaw market where to make gains in one place requires losses in another. A traders market, a bear market in one asset to fuel a bull market in another, sector rotation, rebalancing, shifting capital flows, call it whatever you want. The bull market is over.

For today, the Nasdaq is right on a resistance line. I don't put too much stock in this trendline, but because other index charts are at better spots, I do think this is more than it seems at first glance. Moreover, there isn't much resistance for about 400 to 500 points. Maybe 2 to 3 percent is left. It is 4 percent up to resistance on the QQQ. FWIW, I bought puts on FNGS yesterday, the FANG ETF that is 10 percent in the top-10 FANG stocks (inlcuding a few Chinese ones).

The S&P 500 Index needs to stay below 4550 to keep a bearish outlook. Above and it starts chewing into resistance. Apple is a huge reason for this move so far, which makes it weaker than it appears, but to go higher will require more participation from the rest of the index and that in turn will make this move more bullish the higher it goes.

Finally the Russell 2000, the chart that "confirms" the NQ line for me. The Russell has more resistance though. I have focused on IWM puts and calls lately because the chart looks better.

As for what could pop the Nasdaq and technology today, look no further than crude oil and energy. Exxon Mobil beat earnings, but the premarket gain has been limited with crude oil sliding this morning. Crude and energy have had almost uninterrupted rallies since December.

Something has to give soon. There's still room for a rally in the major indexes, but the Nasdaq is not going to keep rallying if crude oil stays strong. The indexes are also now in prime position for a bullish failure. If the Nasdaq doesn't go higher today, short away. A morning rally in Nasdaq might also be a fakeout, I'd look for confirmation from the S&P 500 and Russell 2000. Google reports after the bell today, along with Paypal. Amazon reports later this week. Many traders avoid earnings season because of higher volatility, but the charts on tech continue showing great setups. I like the risk/reward.