Nasdaq Futures monthly Fibonacci grid – pivotal technical point aligning with the upcoming elections
1. Technical Setup for NQ
- Current Support Levels: The NQ is testing support near the 100-day and 200-day moving averages, a crucial point as it approaches November session lows. A breakdown here could indicate a broader bearish trend, while a bounce could trigger a retest of recent highs.
- Potential Market Bounce: If support holds, a short-term bullish opportunity could arise as the NQ re-approaches recent highs. Failure at this level may signal a cautious or bearish stance, particularly if it aligns with broader tech sentiment.
- This chart was created using AFT8 for NinjaTrader Desktop. The daily chart template includes MSFG, Swing Pivots, and daily benchmarks, available here for free for sim and NT demo trading.
2. Sector Dependencies and Earnings
- Tech Dominance and Innovation: Key growth drivers like AI, nuclear tech, and biotech continue to dominate. Earnings in these areas, particularly AI and automation, may boost revenue and efficiencies while potentially reducing workforce overheads.
- Biotech’s Role: Biotech is expected to drive future gains alongside tech and AI, especially with innovations in healthcare automation and pharmaceuticals.
- Earnings Quality: A reliance on fiscal strategies and speculative returns could introduce volatility, particularly affecting growth-focused sectors like small caps.
3. Macro-Economic Indicators
- Non-Farm Payrolls & Purchasing Power: Recent NFP data suggests a decline in real purchasing power for both supervisory and non-supervisory workers, potentially impacting consumer-driven tech and retail sectors.
- Federal Reserve Decisions: With the 13-week Treasury Bill yield at 4.43%, slightly below the 4.5% threshold, a 25 bps rate cut is expected in the November 7 Fed meeting, possibly boosting sentiment in tech and growth assets.
- Future of Tech Growth: The world stands on the edge of a tech-driven frontier, with sectors like AI, Automation, and Biotech poised to lead. The U.S. must decide whether to spearhead these advancements or risk losing ground to global competitors.
4. Political Climate and Implications for Corporates
- Election Scenarios: Analyzing potential impacts without political bias:
- Democratic Policies: Increased spending on non-revenue-generating projects could raise corporate taxes, potentially affecting GDP if growth investments are not prioritized domestically.
- Pro-Business Stance of Trump: Lower taxes and incentives may retain more businesses within the U.S., fostering conditions favorable for large-cap and tech stocks.
- Expected volatility may lead to a market pattern similar to 2016’s seasonal movements.
5. Banking Lobbies & the Industrial Revolution
- With the banking lobby capitalizing on elevated mortgage rates, a reduction in rates could spur a shift of funds from bonds and money markets to equities, especially ETFs.
- Reduced mortgage and bank lending rates could stimulate growth, supporting GDP and reducing failures tied to high rates.
6. Market Strategy and Trade Opportunities
- Market Characteristics: High price levels suggest favorable trading ranges even in corrections. Institutional buying on retracements supports medium-term opportunities, particularly within the tech sector.
- ETFs & Shorting Mechanisms: Long-only ETFs dominate volume, signaling buying opportunities during dips. Inverse ETFs may serve as short-hedging tools, though the market remains inclined towards “buying the dip.”
Potential Strategies
- Short to Medium-Term Plays: Monthly session opens and weekly levels serve as key indicators for high-probability trades within day-trading alignments.
- Market Bias: A medium- to long-term bullish bias with periods of volatility, creating opportunities in buying dips or selling failed highs.
