Here is a brief analysis of the weekly MNQZ26 chart by video.
As the video discusses, we may have found support around 26,484 for MNQZ26. We may not be done with the selling of QQQ stocks, but at least through Friday we did not close at the low of the day, and prices recovered slightly on Friday.
Are we still in a bearish situation? It is still hard to tell.
If you believe Steve Eisman, the entire private credit funding of AI is a real risk to both AI itself and the economy generally. If you look at NVidia, the company deeply involved in the entire sales and financing of chips for data centers, the CEO Jensen Huang apparently was involved in an affair with a Chinese spy.
Does that news matter to the stock market? Maybe, maybe not. There is uncertainty on every front.
Are we at a market top? If you believe veteran technician Tom McClellan, new lows are rising on the NASDAQ 100, but they’re not nearly at peaks of other bubbles. You read my most recent posts about volatility being muted compared to events like the dot com bubble. The top on the price momentum side is likely still not at its peak if you look at this comparison.
With regard to private credit, you could listen to an often profanity-laced commentary from George Nobel, former Fidelity fund manager, about how out of control private credit is, and how it can affect your 401K in other ways that AI malinvestment may not. The less profanity-laced discussion of this issue can be found here.
You also must realize that both the PRC and the USA are coming up with open-source AI models that do not require such data-center buildouts. That fact makes the idea that the hyperscalers can ever capture trillions of dollars of revenue to pay off the massive debt they’ve taken on in private credit increasingly unlikely as time passes. That same issue applies to insurance companies looking for yields they can’t find in U.S. Treasury bonds. That private credit ends up in your annuities and your 401K. It’s just another day on Wall Street, like in 2006 and 2007, right?
Everything is truly up in the air at this point, and it is changing seemingly at the speed of light.
At this hour, late as it is as I write this, we are sitting on key price support in MNQZ26. We will simply have to see how the news unravels to find where any true bottom is.
I am flexible because I can shift from long to short when my models give me that indication. For the long investor with a long time horizon, I would begin to build shopping lists as any correction unfolds and study them carefully before committing, knowing things could get crazy in the short run. Consult of CFP or other qualified investment professional to see how it fits your investment goals.
If I had a short-time horizon like retirement, I would consult a CFP or other qualified investment professional to hedge and spread risks, as there is a lot going on under the hood of the stock market, the commodities market, and even the private investment and private credit markets. You cannot go in blindly and expect investment to perfectly land on its feet.
This week’s video about trade expectancy will hit this evening. We hit a glitch while rendering the video as the AI suddenly revolted against things it did easily over the last three weeks! Thank you for supporting the Buffalo Trader’s Writing Desk! We appreciate all new subscribers. If you like our content, consider becoming a paid subscriber to help us increase and improve the content.
Have a great week everyone!