US markets ready to roll over - Biden doubles capital gains tax

Apr 22, 2021

Markets are ready to roll over and I have been looking at the short side last few days as in my opinion risk/reward favours down at these levels. Looking for a pullback to 20MA at the minimum and ideally to 50MA. Imo a healthy pullback is overdue before new reaching new highs - 5% or so, maybe as much as 10% if this turns into a larger selloff but my targets are for a 5% pullback.

Biden has today announced plans to not only raise Capital Gains tax in the US but to double it. This could translate into more selling over the next few days. A move into the dollar index DXY can be observed today and it appears to have formed a bottom earlier in the week.

Exercise caution with big tech earnings (FAANGM) next week - however NFLX dropped 10% after hours on Tuesday after missing targets. Another reason for increased volatility although it may be to the upside...



On smaller timeframes, I'm looking for weekly lows / support to break to confirm the bear case - 4120ish on SPX and 13715ish on NAS. See 4hr charts below.

SPX 4hr:
TP1 - 4065
TP2 - 4000


NAS 4hr:
TP1 - 13500
TP2 - 13300


SPX
SPX500USD
ES1!
NAS100USD
NQ1!
DJICURRENCYCOM:US30

Apr 22, 2021

Note

And another view of SPX daily chart

May 4, 2021

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It's happening - granted I was a little early

May 4, 2021

Note

FYI I'm short NAS and looking for 13300's this week

May 6, 2021

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I'm still playing Nasdaq primarily and took profit on NAS shorts on Tuesday. Was a great day for taking profits on shorts.

However Nasdaq is now at a decision point & coiling. Should hopefully see a big move today - volatility squeeze due in either direction today imo. Wait for confirmation in NY cash session.

I think there is a good chance we see a final big leg down today looking at daily timeframes and weakness in tech as of late. Still thinking 13300's should be retested this week. However my indicators on smaller timeframes are also pointing towards a bounce up soon and NAS is on a big support line.

4hr chart


Daily chart

May 7, 2021

Note

I think the NAS / tech 'bear market' may be over:

If it was bearish it would've made new lows yesterday, but instead double-bottomed and bounced on this white ascending trendline from March lows.

Separately data has recently been released that hedge funds have been shorting tech 9 of the last 10 days and we could see a short squeeze up to new highs in the coming weeks
zerohedge.com/markets/here-comes-squeeze-goldman-prime-says-hedge-funds-shorted-tech-9-past-10-days

4hr chart - bounced at support and DMI about to cross bull, with MACD and Stoch also turning upwards