Nasdaq 100 futures hits 4000 and eyes 4071, as buyers remain in control.
Buyers Squeeze the Shorts
Remember the sellers I wrote about last week, the ones that were on their second defense of 3911.50 in the E-Mini NASDAQ 100 [NQU14: CME] futures? Yeah, they got their stops run, as buyers continue to squeeze the shorts out of their positions. Here’s what I wrote (We Nailed 3830 in the NQ): “responsive sellers are beginning to defend the midpoint of the range at 3911.50, which is their second such defense in the last two weeks…If buyers can run the upside buy stops through 3940, we could see expansion down the road that ultimately takes price to 4071.25 and 4151.25.”
In essence, the sellers that were defending 3911.50 eventually became the buyers that pushed price above 4000. Here’s what happened, when sellers finally got price to go offered back below 3900, larger buyers stepped in to defend value at 3885, which immediately sparked an intraday reversal that ultimately triggered upside buy stops through 3920 and into 4020.
This recent short squeeze is one of several that have provided fuel during this rally since the 3830 bottom.
Next Targets are 4071 and 4151
Our initial call to buy 3830 identified 3991.50 as the first significant upside target, which has now been reached for a move of 160 points. The next two upside targets are now 4071 and 4151, which are the 50% and 100% expansion targets of the current range. The key range we’re playing spans from 3831.75 to 3991.50, and has a midpoint at 3911.50.
The NQ is currently attempting to hold above the top of the range at 3991.50, which is the biggest key level to watch at present. Holding above 3991.50 implies acceptance, and could trigger further strength toward our next significant target at 4071, with scaling points at 4043 and 4055.
Failure to hold 3991.50 likely runs the downside sell stops into 3940, with a shot to retest the center of the key range at 3911.50. As always, every pullback offers a buying opportunity, as buyers will be eager to defend 3920 to 3940 for another shot at new highs.
Cheers!
Frank Ochoa
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