dpI’ve recently discussed the implications, both in this space and during our most recent Market on Close livestream, the implications of a rare Diamond Top technical formation for the Nasdaq-100 Index ($IUXX).
This index serves as the benchmark for the widely followed Invesco QQQ Trust (QQQ), which is overwhelmingly dominated by its top 10 holdings, at nearly 45%.
Those top 10 QQQ constituents closely mirror the red-hot artificial intelligence (AI) trade – Magnificent 7 stocks like Nvidia (NVDA), memory stocks like Micron (MU), and semiconductor heavyweights like Advanced Micro Devices (AMD).
As we wait to see whether the Nasdaq-100 Diamond Top resolves on its own, the TTM Squeeze is “ON.”
This signal follows a period of contracting volatility and carries with it the potential for a quick and significant breakout.
Remember, the squeeze doesn’t predict the direction, but watching for technical clues can help us to see whether the probability is leaning in one direction.
That could include a post-bear divergence with a negative momentum crossover.
Or a 20-day moving average – 50-day moving average crossover.
Alternatively, watch for a break of the TrendSeeker flat value of 28,971.
With these charts on the radar, it should be an interesting – and instructive – period over the next few days as we go deeper into earnings season and the positive seasonal tendency of July.
– John Rowland, CMT, is Barchart’s Senior Market Strategist and host of Market on Close.
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
