The indexes have been sloppy, in addition to being relatively weak. The choppiness has some benefits, though, as this choppiness has meant that squeezes are consolidating everywhere.
I can’t say I recall a time in which I have seen so many squeezes across so many different indexes and sectors simultaneously.
What does that mean? It means that pressure is building, and it’s ready to break out. Let’s look at the Nasdaq futures daily chart below.
We are stuck between about 11,000 to the downside and 13,000 to the upside. That squeeze firing will be the signal that will ultimately determine which direction this thing goes.
Right now, the technical structure is still bullish. We have price above the moving averages, Fibonacci zones, a nice cup and handle, and a slingshot squeeze setting up.
But, could the Nasdaq squeeze possibly fire long, given all of the heaviness in the market?
Yes, it could. Why? Because the put call ratio is demonstrating extreme bearishness and the semiconductor, the leading, relative strength area of the market, is continuing to trade higher.
Let’s check out the semiconductors on the Phoenix Finder.
The Phoenix Finder compares chosen stocks within my watchlist and puts them on the same grid to compare them against the index.
This grid covers my semiconductor grid. The green, yellow, and red highlight if the stock is in a bullish or bearish trend. The bright green plus the boxes demonstrate the strongest bullish trend. By looking at this grid, traders can compare how strong individual stocks are, especially compared to the ETF or index.
Phoenix Finder Turbo – Semiconductors
Looking at this comparison grid, traders can see that Nvidia (NVDA) is the strongest semiconductor stock on the daily timeframe. Advanced Micro Devices (AMD), Applied Materials (AMAT), Broadcom (AVGO), Cadence Design Systems (CDNS), and Analog Devices (ADI).
When the stocks pull back, they turn yellow and red on the grid. It makes the most sense when they flip back to the upside with green and then bright green colors when entering for a long trade.
As you can see, many of these relative strength leaders are leading. Which…is typically what happens before the Nasdaq fires long.
So, what is a trader to do?
Watch, and trade the leaders. When the leaders start getting crushed, that is the first signal that the indexes shift lower. But, as long as they are trading higher, they are great aggressive trading vehicles to the long side.