- The NASDAQ 100 has gone back and forth during the trading session on Friday, as we continue to hang around the 50-Day EMA.
- That does make a certain amount of sense as we are forming a broadening wedge, and of course, have a major Federal Reserve meeting next Wednesday.
- That should give us a bit of a heads-up as to where the market is likely to continue to see monetary policy heading.
At this point, we could rally, but I think somewhere around the 12,200 level, we should see a little bit of resistance. On the downside, there is that downtrend line that is part of the wedge. It will break down below there, then it’s likely that we could go down to the 10,750 level, an area where we had bounced from rather significantly due to the so-called “double bottom” the form there.
Market Likely to Grind Back and Forth
Keep in mind that the master shot higher had to do with Jerome Powell dropping the ball, as he continues to have no idea how to speak to reporters without having some type of script in front of him. He unfortunately has cracked the door to the possibility of the Federal Reserve slowing down, which of course has Wall Street buying everything it can get its hands on. He clearly does not understand how the game is being played, as it’s all about liquidity and it has nothing to do with the economy. The Federal Reserve will have to get its point across at this next meeting, or risk inflation of asset prices, and therefore exacerbating inflation in the real economy.
Ultimately, we must worry about the action after this coming week, because at that point then we start to look at the lack of liquidity that comes at the end of the year. We could get the so-called “Santa Claus rally”, when money managers try to put money to work with all of the “correct assets” to show clients that they have been doing something and to pad their end-of-year returns. However, I think more likely than not we are going to see the market grind back and forth unless of course, the Federal Reserve set something on fire, which is something that’s very possible this next week.
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