- The NASDAQ 100 has fallen again during the trading session on Tuesday after initially gapping higher.
- At this point, it looks like we’re hanging around the 11,250 level, an area that has been supported a couple of times.
- This level being broken down could open the possibility of a move down to the 11,000 level.
- The 11,000-level underneath is going to be an area that a lot of people will continue to be paying attention to, since it is a large, round, psychologically significant figure.
Rallies now should be a nice selling opportunity, as we continue to see rates climb, which of course is very negative for the high-growth technology companies. Ultimately, they need cheap money to get venture capital into the sector, therefore I think at this point it’s likely that we see a lot of weakness in this index, because quite frankly people are not willing to take a lot of risks out there. However, you should also keep in mind that the NASDAQ 100 is probably more likely to be thought of as the “NASDAQ 7 or so”, as it’s just about 7 companies that move this index more than anything else.
Markets Remain Unstable
If we do break down from here, then it’s likely that a move below the 11,000 level could open a huge move lower. At that point, we could drop another 1000 points in a flash, especially if we have some type of panic out there. The markets will continue to be very unstable, and I think that leads to a lot of selling pressure eventually. Short-term rallies continue to offer opportunities to short this market from everything I see, and I don’t have a situation where I would go long anytime soon, at least not until we see the Federal Reserve change its overall monetary policy, because that’s one of the biggest problems that we see in financial markets overall.
Another thing that you need to pay close attention to is the fact that the global economy seems to be slowing down, so a lot of these companies will take a bit of a bashing when it comes to sales as well. Remember, investing is all about risk appetite and the risk spectrum, and NASDAQ stocks tend to be far out on that range.
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