This morning I saw the Nasdaq futures still showing tremendous bearish divergence on the 1hr - 4hr time frames. This was on the stochastics, MACD, and even the RSI. Bearish divergence on the RSI, especially at chart time frames above 30min tends to be a very good indicator. This suggests heavy weakness in the Nasdaq coming. Plus, it's close to its recent highs from a few weeks ago, so risk is well defined and tight if taking a short position.
I sold some of my QID position to free up capital to buy QID call options (which double shorts the Nasdaq 100). I wanted to short the Nasdaq 100 on even more leverage because I feel it's about to fall hard.
This Nasdaq weakness may lead the blue chip S&P and Dow down as well, but that's yet to be seen. I don't say any big divergences in the blue chips on the larger time frames, and I keep getting 5 and 3 waves both up and down all over the place so the trend is unknown to me right now. Also, breadth is slightly positive in the NYSE even though it's been in the negative most of the day. So I'm primarily looking at the Nasdaq for direction because the only area that's showing any signs of immediate direction.
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