This Wednesday’s FOMC statement is the first since the Fed communicated its expectation of tapering asset purchases soon on May 22 and the crowd started questioning Abenomics in Japan. That makes for enormous event risk this week.
But the crowd isn’t concerned right now. Stock index futures are rallying nicely, with the NASDAQ 100 E-mini outperforming. This heightens the probability of the near-term downtrend in the index reversing. At miAnalysis, I’ll be eyeing a position trade opportunity for clients in QQQ (Power Shares QQQ), among other set-ups this week.
THE PATTERN
The NASDAQ 100 is tracing out a double bottom pattern defined by the lows on 6/6 and 6/13. The floor at 2911.9 confirms two layers of technical support. The first is the bottom of a gap up between the 5/2 and 5/3 sessions. The second is 2921.6 – a 23.6% retracement of the November-May uptrend, a natural percentage retracement to occur before the next turn based on the tendency for uplegs and downlegs to be proportionally related in accordance with the Fibonacci sequence.
KEY LEVELS
Clearing the intervening high of 3004.7 would confirm a breakout, in which case the measured move would be 3097.4. The same move would put QQQ at 76.05, up from 72.28 on Friday.
