- The NASDAQ 100 initially gapped to the upside during the training session on Friday, as markets initially took off to the upside after the jobs number.
- The market has given back all of the gains rather rapidly, and it does suggest that perhaps going to continue to see the downtrend take hold again.
- Ultimately, this is a market that had broken above the downtrend line, and now it is breaking back through. Now it’s very likely that we are getting ready to go much lower.
The Federal Reserve has reiterated this week that they are going to continue to fight inflation, and therefore remain tight for longer than people thought. With that being the case, there is likely that we will see the market try to get down to the 10,500 level, perhaps down to the 10,000 level. Rallies at this point continue to get sold into, and now it looks like the 50-Day EMA has offered itself as a bit of a ceiling in the market.
Continue to be Bearish
The jobs number was slightly higher than anticipated, and therefore you need to pay close attention to the fact that the Federal Reserve still has no reason to loosen monetary policy, and therefore stocks will continue to take a bit of a beating. Ultimately, this is a situation where risk appetite is getting eviscerated, and I do think that it’s only a matter of time before you see all these rallies sold off. In fact, it’s not until we break above the 50-Day EMA that I would look at this chart as one that starting to look positive.
If we did break above the 50-Day EMA, it would confirm a bit of a double bottom and a potential “W pattern.” The market would of course look very bullish at that point, but quite frankly I just don’t see how that happens in this environment and clearly, we have seen a lot of damage done as of late. If that’s going to be the case, there’s no reason to get overly excited about owning stocks, especially technological stocks which tend to be especially sensitive to interest rate headwinds and risk-off behavior. With that being the case, I continue to be bearish on this market and just don’t see how we would be changing anytime soon.
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