- The NASDAQ 100 has rallied a bit during the trading session on Wednesday as we continue to look for a longer-term floor.
- At this point, the market is likely to continue to see a little bit of support underneath, and perhaps even a bounce from a potential “double bottom” that is being formed.
- I would not put too much into it though, because the fundamental situation has not changed whatsoever. Ultimately, this is a market that will continue to be noisy, and therefore difficult to navigate.
We are extended to the downside at this point, so I think a certain amount of a recovery does make sense. Regardless, I think that’s just going to be an opportunity to start shorting again, as the market has almost certainly continued to worry about the same things, even though there may have been a little bit of a “relief rally.”
Technical Resistance Ahead
The 50-Day EMA currently sits at the 12,225 level and is dropping. I believe at this juncture we are likely to see plenty of technical resistance, and I do think that it is probably only a matter of time before that area could cause quite a bit of downward pressure. Furthermore, the 12,000 level itself will also be resistive. Keep in mind that the NASDAQ 100 is highly sensitive to a lot of different things at the same time, not the least of which will be interest rates. It appears that interest rates took a little bit of a breather during the day, but the trend is still very much intact.
If we break down below the lows that we have formed over the last couple of days, it’s likely that we would see this market really unravel, with the most likely of targets being the 11,000 level, followed by the 10,500 level. I have no interest in buying this market, even though I can make an argument as to why it might rally for a couple of days. The NASDAQ 100 is driven by a handful of stocks as per usual, so keep an eye on Tesla, Microsoft, Apple, Alphabet, and a few of the other big names. The index is not built to fall, but there’s not a lot out there to support higher pricing and valuations.
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