Follow-Up: What Played Out Since July 31
We need to take a look at Nasdaq again because of the recent rally we have seen, which is a very strong v reversal. For those who regularly follow the technical analysis we post on our blog, you would know we were watching the 27,156 level very closely on NQ because it was a multi year support/resistance level. Price tested it almost to the tick and reversed, giving us a 2,700 point rally in only 4 days.
The question now is whether there is enough strength for it to continue or it is overheated and we see a pullback before moving back toward the ATH.
The August 4 Rally, in Context
A few points worth flagging for readers:
- Strong earnings were a major driver. Palantir surged roughly 29-30% on what one report called “otherworldly” growth, and Caterpillar jumped over 5% on record quarterly revenue, both feeding risk appetite in growth and industrial names alike.
- Cooling Middle East tensions added a tailwind. Reports pointed to easing concerns around the Strait of Hormuz and a potential path toward a broader agreement, which helped push oil prices lower and reduced one of the market’s key inflation worries.
- The rally was broad rather than narrow. Advancing stocks outnumbered decliners by roughly 3-to-1 on the Nasdaq, and technology as a sector was reported up more than 4% on the day — this wasn’t just a handful of mega-caps carrying the index.
- Not every signal was unanimously bullish: AMD reportedly slipped in after-hours trading despite solid results, a reminder that AI-related earnings reactions are still being parsed stock by stock even within a broad rally.
Key Support and Resistance Levels
Major Resistance
| Level | Notes |
|---|---|
| 29,895 – 30,000 | Current level; also the ceiling of May’s distribution range before the summer correction |
| 30,300 | Mid-July lower high |
| 31,100 | Early June swing high, the year’s high so far |
Major Support
| Level | Notes |
|---|---|
| 29,646.31 | Faster moving average, now reclaimed and the first support on any pullback |
| 28,900 | Former resistance shelf, now the key level that needs to hold to keep the breakout intact |
| 27,109.78 | Slower moving average, the deeper trend-defining support |
Possible Trades
Bullish continuation
- Entry trigger: daily close above 30,000, confirming a break of the May range ceiling
- Stop: below 29,646
- Target: 30,300 initial, 31,100 extended
Pullback / fade scenario
- Entry trigger: daily close back below 29,646, signaling the rally is stalling into resistance
- Stop: above 30,000
- Target: 28,900 initial — a level that should hold if this is a genuine breakout rather than a false move
Invalidation / range scenario
- Continued chop between roughly 29,650 and 30,000 without a decisive close either side should be read as digestion after a fast two-day move, not a failed breakout
- A close back below 28,900 would be the first real sign the reclaim has failed
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