Declines in DAX, NASDAQ and SPX: the American session today

04.09.2018 / 16:13

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Today NASDAQ (and US stocks as a whole) collapsed after rising earlier in the day. The decline was probably caused by Facebook's downgrade by analysts at MoffettNathanson, who described the company's performance in the past year as "toxic", especially in combination with the risk of additional regulations. Goldman Sachs issued a sell rating on Tesla for about $210. We believe the US Session will begin with strong bearish pressure on stocks due to downgrades and an overall search for safe havens.

NASDAQ, H1 chart

NASDAQ slumped to support levels to the previous bottoms around 7620, and fell into the oversold territory of DeMarker. We expect the price to meet resistance around 7637-7640, which corresponds to 23.6% Fibonacci. We will keep track of the breakout price over 7637 and DeMarker will cross 0.3 to open a long position in the direction of the trend. Under this scenario, we will have a triple bottom around 7620, a significant price support. Alternatively, if the price break below 7620 and close there, we may see a correction in the long-term trend.

DAX, daily

Today DAX reached near the lower limit of the diamond it formed in the beginning of March. The diamond top formation is a reversing formation (similar in structure to the head and shoulders), and if completed, we can expect serious losses in the value of the index. A short sell signal will be a break below 88.6% Fibonacci support, which also corresponds to the current diagonal support of the formation. The height of the diamond is almost 2000 points, measured from the top to the bottom of the formation.

Overall, we expect a cautious sentiment at the start of the US session, and perhaps a continuation of the slump in European markets and in US futures before the start of the session.

Source: CNBC

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Declines in DAX, NASDAQ and SPX: the American session today

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