Are the bears taking their chance now?

On July 14, the title of the internal stock exchange was “It can happen so quickly!”. Back then – although “back then” didn’t sound very fitting since it was only 10 days ago – the Nasdaq 100 had slipped from almost 11,070 points to just 10,370 points within two days. The technology index had therefore lost around 700 points or more than 6.3% in a very short time.

History has since been repeated. Last Tuesday the Nasdaq 100 was at 11,017 points in the high, yesterday it was only 10,314 points in the low. Again, the index lost around 700 points or more than 6.3% within a very short time.

Clear approaches to an upcoming correction

And when you look at the absolute numbers, you notice that they are very similar, so the index has fallen from roughly the same highs to roughly the same lows. The idea of ​​a possible double top could come to mind.

However, if you look at the course of the course, you can see shortcomings. For a real double top, the time frame is too short and the necessary symmetry is missing. But the 11,000-point mark appears to be a tough nut to crack. And the approaches for a correction can be recognized without a doubt. You should therefore now keep a close eye on the current course development.

63% in just 77 trading days

Especially when you look at the following chart, which the readers of the premium trader also received the day before yesterday, but which has already been discussed here at Börse-Intern (see e.g. Börse-Intern dated June 3), you may find one become dizzy.

Nasdaq 100 - rapid price increases

It can be seen that within just 77 trading days or 112 days, the index was able to increase more than 63%. In the two previous increases, it only managed about half (33.2% and 30.5%) within 83 trading days (122 days) and 94 trading days (139 days).

The Nasdaq 100 could easily fall 15%

A 38.20% correction in an upward trend is generally considered normal. For the Nasdaq 100, however, such a would mean that the index would have to drop easily to below 9,500 points – i.e. could lose a whopping 14.8% from the high of July 13 – just to do so from the perspective of the Fibonacci brands (blue lines in the following chart) to achieve the minimum goal (!) of a correction.

Nasdaq 100 - Fibonacci retracements

In my view, this is not unrealistic. Because even with around 9,500 points, technology stocks, measured in terms of price-earnings ratio (P / E), would still not be cheap at all. And just to remind you: The 30% exchange rate increase from October 2019 to February 2020 was more than fully sold. And the 33% increase from the beginning of 2019 was corrected by less than 50% but more than 38.20% (see following chart).

Nasdaq 100 Fibonacci Retracements 2019

And if you are still wondering what that thick blue line in the charts is: That is the 100-day average of the Nasdaq 100. The day before yesterday I wrote in the internal exchange that “There have recently been new clear signs of a significant exaggeration in technology stocks“, Which we have already told our readers of the premium trader. This line belongs to one of these signs.

Biggest difference since the Neuer Markt bubble burst

Namely, the Nasdaq 100 was at its two recent highs more than 21% above its 100-day average, which is the biggest difference since the stock market’s top in March 2000 and the bursting of the Neuer Markt bubble. The comparisons of the current market situation with that of 2000, which I have recently made (see, among other things, “When to the stock exchanges from insanely exaggerated going completely crazy ”), so make more and more sense. Even if I still do not see a bubble in the current market situation, I still expect another, larger correction in view of the increasing warning signals.

With a view to the correction approaches in the Nasdaq 100, it may also be understandable that the day before yesterday we ventured into the market in the premium trader with a small short position on the Nasdaq 100. Thanks to today’s price losses, this is already in the profit. – It’s not too late yet. If you still want to participate in the trade, take a closer look at the premium trader. Then you will also learn what other signs of a significant exaggeration have recently been.

The first approaches to a correction still have to be confirmed

Now the approaches to a correction only have to be confirmed and the mood of the investors lastingly changed. Then you did a lot right with profit taking and a possible entry into a short trade. But as I wrote in the stock exchange intern of July 10th: “On the stock exchange you should always proceed step by step.“So let’s wait and see how yesterday’s trading day in the US ends and how prices start into the new week. If the prices remain rather weak, you could bring more sheep into the dry – that is, take profits again – and possibly even place other small short positions in the market.

Since the lows were formed at approximately the same level after the two highs, a consolidation at a high level that would only run sideways or moderately downwards would also be conceivable.

Nasdaq 100 - short term chart analysis

So now the bears have to stay on the ball and do even more so that a correct correction 100 can occur.

DAX: After the breakout, the breakout followed

Incidentally, yesterday the DAX set out to break its (bear) wedge (see blue lines in the following chart) down. The erroneous outbreak on the upside (see stock exchange internal from last Tuesday) turns out to be an evil bull trap with the typical bearish consequences.

DAX - short-term chart analysis

But here too we have to wait and see whether the bearish approaches are confirmed or if we are just experiencing a false signal.

I wish you success in your trading
Sven Weisenhaus


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