6/26/23 Time For The Overbought Drawdown


On Friday, it was hard to find a stock trading in the green.

Stocks slid and closed the week with losses. For the Nasdaq, it was the first weekly loss in over two months.

Photo from Getty Images

All the indexes closed Friday lower…

  • Dow Jones -0.7%
  • Nasdaq -1.0% 
  • S&P 500 -0.8%
  • Russell 2000 -1.4% 

Sector Round Up

All 11 sectors followed the indexes and ended Friday’s session in the red.

The smallest losers…

  • Communications (XLC) -0.2%
  • Healthcare (XLV) -0.3
  • Financials (XLF) -0.4%

At the bottom…

  • Technology (XLK) -1.1%
  • Consumer Discretionary (XLY) -1.2%
  • Utilities (XLU) -1.5%

The reason for the selling lies in the technicals…


You see, when markets reach overbought conditions, a downturn is inevitable.

And returning to neutral conditions is rarely enough to turn the tides.

Check out this chart representing the Nasdaq and pay special attention to the drawdowns that followed after the 10-day RSI reached overbought…

QQQ Daily Candles – Chart by thinkorswim

The conclusion from this chart is simple … Expect lower prices in the next few weeks.

However, the magnitude of the drawdown is unpredictable.

Your latest readout…


Today will kick off the last week of June and Q2.

Expect a slow news cycle. But there are notable releases we’ll be eyeing this week.

  • Thursday brings the final estimate of Q1 GDP activity
  • Friday, we’ll get the Fed-preferred inflation reading, The PCE


*Low Float
^Open Position

*GRNQ support at $2.20
*MGOL support at $2.75
*PPSI support at $8
INOD support at $12
GASS support at $3.60
TALS resistance at $3
^CIFR resistance at $3
SWBI support at $12.50
ONCY support at $2.20
HEPS support at $1.50
BTBT support at $3.50
PDCO support at $31
MRNS support at $10

Secondary watchlist—float 100+ million

TMC resistance at $1.60
support at $4.50
ABCM support at $22
RKLB support at $5.50, resistance at $6

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