Stocks are skating on thin ice at the start of a big week for the markets, according to one trader.
"We've got the Fed, nonfarm payroll and on Wednesday there are a lot of big earnings coming out here," Todd Gordon, founder of TradingAnalysis.com, said Monday on CNBC's "Trading Nation." Apple, Facebook, Microsoft, Amazon and Alphabet all report earnings later this week, the five companies represent more than 40 percent of the Nasdaq 100. "So a lot of data is hitting the market and we're in a technical position where we need to kind of back up here."
Gordon is referring specifically to a parallel channel in the chart of the Nasdaq 100 that has been in play for a few years. According to the trader, since 2009 the market has "respected the top end of this channel, which is your ceiling or resistance," and it has also "respected the bottom side which is support, or the floor."
On a longer-term chart of the Nasdaq 100, Gordon points out that the parallel channel on the weekly chart and that of the monthly chart are about to collide at around 7,100, leaving him to believe that 7,100 is the level at which he wants to protect his profits.
"An overshoot to the upside is totally possible," he said. "But I can almost promise you that when, not if, we do return back inside of this channel, at some point this lower support will break, we will probably come down."
All three major market indexes were down Monday, with the Nasdaq composite falling for its third time in four trading days. The Nasdaq 100 was still trading at around 6,986, just below the levels at which Gordon wants to be cautious.