The NDX is now sitting on a zone of former resistance turned into support; as long as it does not close below this zone on a monthly basis, the short term trend will match the long term trend (UP). If the markets are going to experience a substantial correction in the 4th quarter, they will have to put in a lower high, or the indices will have to diverge. For example, the Russell and Nasdaq test or put in slightly higher highs, while the Dow and SPX diverge by putting in lower lows. There is a fortress of support in the 15000 to 15300 ranges; the NDX is going to have a hard time overcoming this zone of resistance.
We lowered exit targets on high-risk plays such as TQQQ, etc., as we are erring on the side of caution. We might raise them again. However, for now, we would rather risk bailing out early than bailing out too late.
Other developments
The may Job reports could mark the peek in terms of employment. Many tech firms are cutting back, indicating that they will scale back on hiring and trim the current headcount. Telsa stated that they might trim 10% of their labour force. As many business owners know, customers vote with their feet, so businesses can’t easily pass the cost. Hence, their only option is to trim the fat. Many mediocre workers are going to be fired, and as AI improves, this trend will continue to gain traction. The Fed will suddenly be forced to change its narrative when unemployment starts trending up and when inflationary forces pull back. Remember, the cure for higher prices is higher prices. Consumers will scale back on travelling, carpooling will make a massive comeback, and instead of shopping 1-2X a week, they will shop Once every two weeks and order more stuff online to cut back on travel costs.