tastytrade logo
Nasdaq 100 Bearish Market

May 3, 2022

Nasdaq 100: NQ Fresh Yearly Lows Before the Fed Steps to the Plate

By:James Stanley


  • Big tech has seen a big pullback so far in 2022 trade and that bearish theme has heated up as the door has opened into Q2.
  • The big push point is this Wednesday’s FOMC rate decision where the bank is expected to dial up the hawkishness with a 50 basis point rate hike along with some communication around their plans for the balance sheet.
  • I looked at bearish US equities as my Top Trade for Q2 and I wasn’t alone on the DailyFX team, as Messrs Paul Robinson and Daniel McCarthy also had bearish outlooks for the S&P 500. Download the full Top Trades installment from the link below:

It’s been another week of pain for US stocks even with a wide swath of big tech reporting earnings last week. Apple beat but, a few days later price is still down, and that’s a fairly bearish factor because when we’re in a market that shrugs off good news, look out below.

As I had looked at last week, the Nasdaq 100 has breached support in a double top formation and that might lead to a much more pronounced bearish drive. Price started the week by pushing down to yet another fresh yearly low and through mid-day on Monday trade that theme continues to take-hold.

The Friday session was especially brutal, with sellers pushing all the way into the close and the quick bounce that developed after the US open this morning was soundly faded, with the index setting yet another fresh yearly low.

But, on the below chart, notice what happened shortly after that low was set earlier this morning and just after the US open. I’ve added an orange box on this portion of the chart.


Chart prepared by James Stanley; Nasdaq 100 on Tradingview

The item of interest from earlier this morning was a quick resistance test after the open – and that resistance came in right at a spot of prior support, plotted from around 13,033 up to 13,050. The former price is simply last Thursday’s swing-low but the latter price is a Fibonacci retracement that I’ve been following in these articles as part of the long-term support that’s been in-play of recent.

But, the takeaway here is that traders can try to exercise patience in the effort of finding resistance. This would be an alternative to chasing a fresh breakdown and just hoping that the move continues to print in that direction. And there’s a couple of other spots where something similar may come into play, such as the 12,801 prior support swing or perhaps the bottom of that support zone which I have plotted at 12,895.

The key here would be letting price breakdown to a fresh low first, after which a corresponding pullback can open up the potential for lower-high resistance to post at either of these areas.

Nasdaq 100 Four-Hour Price Chart

Chart prepared by James Stanley; Nasdaq 100 on Tradingview


It can be hard to keep in scope just how aggressive the run-up in 2020 and 2021 was but, at this stage, the Nasdaq 100 has retraced a mere 38.2% of that major move.

As a matter of fact, that 38.2% retracement was the 12,895 level that I was speaking of above. And, from the Daily chart below, we can see where that recent trend does not look very healthy at all.

The next major spot of support on my chart spans an area that was last in-play in March of 2021, plotted from 12,207 up to 12,465. Below that, the 50% marker of the pandemic trend shows up at around 11,700, and the last major zone on the below chart is a big one, running from 10,501-10,751.

If the double top formation in the Nasdaq 100 continues to fill-in, that latter target can remain as a projected area of possible support, as I had looked at last week.

Nasdaq 100 Daily Price Chart

Chart prepared by James Stanley; Nasdaq 100 on Tradingview

- Written by James Stanley, Senior Strategist for DailyFX.com

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

US Dollar Pullback Begins: EUR/USD, GBP/USD, AUD/USD, USD/JPY

James Stanley

Apr 21, 2022

US Dollar Talking Points:

S&P 500, Nasdaq 100, Dow Jones Talking Points

James Stanley

Apr 13, 2022

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com. 

tastytrade is a trademark/servicemark owned by tastytrade.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).

tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

© copyright 2013 – 2022 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.