Nasdaq could see some buying BEFORE BEAR MARKET!
Nasdaq was the leading index this year and we found out why pretty recently. The FAANG index was being propped up by nonother than SoftBank with a 55BN options positions on big tech.
SoftBank got their hands on OTM calls for big Tech which did a few things:
1) Forced the options market makers to hedge the position against them meaning they had to buy the stocks. Tying up about $50 Bn in shares on the big Tech companies. This alone pushed US Tech stock prices higher.
2) Created interest in order flow for large traders that saw the options interest and the transaction quantity somewhere OTM on big Tech which caused buying to take advantage of the potential move higher from the big fish.
3) Caused a rally in tech and piqued the interest of a lot of traders that saw tech stocks rallying, jumping in blindly, or calculated entries for the continued push higher.
Which means the recent sell off was profit-taking from Tech and understanding what had happened and selling. To return major stocks to "value"
That caused the Nasdaq to drop nearly 15% from its highs and it seems that there is more downside to come out even though it seems that the support is being held up for now. Support is now at $260 and the 100-day moving average is very nearby.
If this level breaks we're going to see a temporary bear market in the Nasdaq, as we saw the year prior. We could see a pop into $280 on QQQ before we get the downside though! There is a key resistance there. under $260 and the 100-day MA we will see a big sell stop run into the prior broken top and volume profile block.
The volume is worth noting as well, it's decreasing on every rally. Most recent rally at least, with big sell volume. this is a bear sign.
This is an idea, for educational purposes, that doesn't constitute investment or trading advice.
SoftBank got their hands on OTM calls for big Tech which did a few things:
1) Forced the options market makers to hedge the position against them meaning they had to buy the stocks. Tying up about $50 Bn in shares on the big Tech companies. This alone pushed US Tech stock prices higher.
2) Created interest in order flow for large traders that saw the options interest and the transaction quantity somewhere OTM on big Tech which caused buying to take advantage of the potential move higher from the big fish.
3) Caused a rally in tech and piqued the interest of a lot of traders that saw tech stocks rallying, jumping in blindly, or calculated entries for the continued push higher.
Which means the recent sell off was profit-taking from Tech and understanding what had happened and selling. To return major stocks to "value"
That caused the Nasdaq to drop nearly 15% from its highs and it seems that there is more downside to come out even though it seems that the support is being held up for now. Support is now at $260 and the 100-day moving average is very nearby.
If this level breaks we're going to see a temporary bear market in the Nasdaq, as we saw the year prior. We could see a pop into $280 on QQQ before we get the downside though! There is a key resistance there. under $260 and the 100-day MA we will see a big sell stop run into the prior broken top and volume profile block.
The volume is worth noting as well, it's decreasing on every rally. Most recent rally at least, with big sell volume. this is a bear sign.
This is an idea, for educational purposes, that doesn't constitute investment or trading advice.
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