- The NASDAQ 100 has done a very little trading session on Monday, as we continue to bounce around the 50-Day EMA.
- The market then must deal with the fact that we have several market-moving events this week.
- The first one is going to be the CPI numbers on Tuesday, which a lot of people will be looking toward to see whether inflation is cooling off in the United States even further.
On Wednesday, when the Federal Reserve interest rate decision, and perhaps more importantly we have the statement afterward. The market is going to look for any reason whatsoever to be bullish, so if Jerome Powell screws this up again, we could see a massive market rally into the end of the year. After all, anytime he goes off script he says something that the stock market takes bullish/dovish. However, the reality is that we are heading into a blackout timeframe, meaning that corporations will not be able to buy their own stocks after December 19.
Be Cautious
All, you can see I am a broadening wedge drawn on the chart and it does suggest that perhaps the volatility is starting to get to the market. The 200-Day EMA is at the top of the wedge and offers a bit of the ceiling. We also have the 12,000 level between here and there, so that obviously is something that you should be paying attention to. On the other hand, we turn around and break down below the bottom of the wedge, then it opens a move down to the 11,000 level, perhaps even down to the 10,800 level.
I believe that the only thing you can probably count on is a lot of choppiness between now and the end of the year, but it must be stated that liquidity is going to disappear for a couple of weeks, and therefore you will probably be better off taking longer-term positions, or simply not trading at all. Keep in mind that low liquidity can mean that the markets do almost nothing, but it also means that if there is some type of sudden news, the markets can jump drastically and make outsized jobs in one direction or the other. At this point, being cautious is probably the most important thing you can do.
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