Last Thursday the market gap opened down right at our projected NASDAQ downside price target around 12550, which fulfilled a 22% correction peak to trough and it’s also a 38% retracement of the entire rally from March 2020 to November 2021. This price action was due to the fact that Russia declared war against Ukraine last Thursday.
The uncertain macro conditions continue to pressure the market to go lower. There weren’t a lot buyers, plenty of sellers in the market right now. The selling the rip trades will continue to play out as long as the fundamental macro conditions remain the same. Something at macro level has to happen in order for the correction to stop.
Before the January inflation data release, the indices were marching reluctantly to achieve the target of the reaction rally against the Jan 24th low. On February 10th, the headline of the January inflation surging 7.5% on an annual basis, even more than expected and highest since 1982 put a stop to the reaction rally.
The reaction rally against the capitulation low of Jan 24 2022 is progressing as expected so far. The mega techs’ earnings reports drove large swings in the indices last week, but the reaction rally’s chart structure is intact and is on schedule to finish the price and time targets.
