NQ Time Boundaries: What's In Store For October?

I've talked about the importance of 'trading time' in this blog. This is one of the most important discoveries that I was able to make through all of my market research over the years which has impacted my understanding of market 'language' as it relates to market movements and my discretionary decision-making. Trading time governs all market activity. I wrote about how the market spoke to us in late August and gave us a bullish read going into fall by closing above the multi-month high boundary (2753) - which was the first closing above a monthly high level since March 2012. What may have been more meaningful was the August closing above the Quarterly high (2790) level. So going into the last week of September (the end of the 3rd quarter) will be most interesting to see if the Nasdaq 100 index can close > 2790 - the Quarterly high level (Green line) which would re-establish long term directional bias in stocks. It doesn't mean that the market can't correct short term or become increasingly volatile going into the fall, but it sends a strong message for trend continuation on a long term basis going further into the fall time period. This would imply aggressively buying any pullbacks.

What would be more bullish is a dual time-period closing above both the August monthly high = 2802  (Red label indication) and the March-August Quarterly high = 2790 (Green) by September 30. We can reference all of these areas on the day chart below, keeping our eye on the 2802 level by the end of September. The other scenario is if the NQ closes below both of these time boundaries, and more importantly, below the Quarterly time boundary (2790 - Green) then the market is saying that it would need more time to develop going into the fall, creating more uncertainty associated with fall trajectory and more volatility. 

By interpreting where the market positions itself in relation to key time boundaries at monthly and quarterly turning points creates an objective approach to reading market language.

In the context of the current short position, we need to be watching for all of the above mentioned levels. From the perspective of the short term trend below, we can see that we are now coming into several support levels in the Nasdaq 100. We have to create realistic scenarios of expectancy without getting ahead of ourselves in any positional/swing trade. The destination for this short trade that was put on a couple days ago  is a logical rotation back to the lower weekly boundary level at 2775. On the way down, however, we have a few stops that may prove to be stronger support levels - August monthly high (2802) + Quarterly High (2790) -- if the market closes below either of these levels by the end of the week it may be prudent to expect the market to become weaker in the short term going into Oct  - as I mentioned above about key month-end closings. If the market closes above either of these levels by the end of the week, it is possible that we could see some kind of retest of the 2860 highs. 

With respect to time, as I've mentioned in previous writings, the market is currently in an uninterrupted Long swing that has lasted for 81 days, since the June turning point. We are approaching 4 months of trending activity without a weekly countertrend. This increases the odds that the market is overdue to correct on the weekly timeframe. We need to closely monitor the Weekly low 2775 as per the 15min chart below to see if the market turns down below this level by the end of the week, which would suggest a deeper correction going into early Oct.