- The NASDAQ 100 Index has initially rallied during the trading session on Tuesday to pierce the trendline that I have drawn on the chart.
- The market is a bit noisy to say the least, so it’ll be interesting to see whether or not we pay attention to it.
- More likely than not, what people are paying attention to is earnings, which of course we are just starting to get from the financial sector.
Nasdaq 100 Technical Outlook
The 50-Day EMA currently sits right around the 11,300 level, an area that has been noisy in the past, as we have formed a couple of hammers based upon that indicator. That being said, we also could get a shock to the system as quite frankly, I believe that a lot of earnings are going to be poor. However, never forget that the “narrative” can jump into the picture and really get traders excited because they believe that the Federal Reserve is eventually going to bail them out.
The Federal Reserve bailing them out probably is true down the road, but we are quite some time from that happening. I’d also point out that we have seen a massive selloff from areas just above, as we break through the bottom of a megaphone pattern in the process. Because of this, I think we do have a lot of noise to overcome, and it will be interesting to see whether or not we can. If we break down below the 50-Day EMA underneath, that could open up a lot of selling to threaten the 10,650 level yet again. At this point, the market is likely to see a lot of volatility, so therefore you need to be very cautious about the position sizing that you have on, due to the fact that the markets will continue to get the occasional surprise. Furthermore, the NASDAQ itself is facing a lot of pressure due to the fact that we have tight monetary policy, and a lot of the profitless tech companies out there desperately need that cheap money to get going. That being said, we could go as high as 12,000 and still not break structure overall, so certainly I would not get heavily short either. In other words, keep an eye on the volatility profile each day, because it will swing quite rapidly over the next couple of sessions.
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