2025-02-12 - priceactiontds - daily update - nasdaq

Good Evening and I hope you are well.

comment: CPI was the gift to the bears and what was the perfect setup for continuous selling to the lows of this bigger trading range, became the ultimate bear trap. Bears now have only 2 daily bear bars during the past 8 trading days and today printed a really nasty reversal bar. We are still making lower highs but if bears can’t stay below 21900 tomorrow, I think we could see a bullish breakout above for a retest of the ath.

current market cycle: trading range

key levels: 21500 - 22000

bull case: Bulls probably burned enough bears today that many will give up until we see bigger selling pressure instead of single sell spikes. That opens the possibility for the bulls to print higher highs above 21900 and test the previous monthly high at 21967. If bulls are strong enough tomorrow, it could setup the next impulse higher to retest 22450.

Invalidation is below 21400.

bear case: Likely that bears are done with these reversals and they could give up tomorrow because market clearly rejects lower prices. Bears now had 5 big spikes down in the past 8 trading days and all were rejected hard. Above 21967 I highly doubt bears will fight this if we get above 21967. What would the bears need to keep this another lower high and go down? Yeah right. Neither trade war stuff nor the hot cpi print could bring this down. If somehow bears manage to get strongly below 21750 tomorrow, there is a small chance of more downside to 21670 but at this point it’s very low probability.

Invalidation is above 21970.

short term: Can’t be bear after such a trap today. Bulls need something above 21967 and if they get it, it’s a clear buy signal and we likely melt higher. Bears having more arguments if they strongly go below 21760 again but it would likely turn the market neutral at best. Middle of this range is still 21700.

medium-long term - Update from 2024-02-09: Another lower high but also higher lows. Bears are not doing enough, so we are in a trading range below the ath. We are close to it that there is always the possibility of printing a higher high again. Bears need lower lows below 20600 before we can talk about 20000 again.

trade of the day: I am always flat into bigger news releases, so shorting into cpi was out of the question. Could you buy the big cpi print near 21500? Well, I would not and I did not. Why? Of course bulls reversed most this week but the spike was so huge, it could have easily become a risk-off event. Biggest question today was, when should you have joined the bulls and when did it became clear that bears can not retest the lows again? Bar 19 had a huge tail below, bears tried to test down to 21500 but failed. Bulls then printed another very strong 5m bar and if you did not want to go long like me, it should have been at least the death for bearish price action for that moment since if bears would have been strong, those big bull bars would have never happened or would have at least been followed by a bear bar and bulls just printed consecutive bull bars.