- The NASDAQ 100 has fallen during the trading session on Wednesday, as the 15,250 level that had originally been a target has now offered a bit of the ceiling.
- At this point, it does make a certain amount of sense, and I do think that we will continue to see a lot of pressure above.
- Ultimately, the market had just gotten a bit ahead of itself and had just formed a “triple top.”
It’s worth noting that the NASDAQ 100 is just 7 stocks, so all you need to do is pay attention to what they are doing to get the overall direction correct. The same culprits are responsible every time, including companies like Nvidia, Tesla, etc. Ultimately, this is the construction of indices, that they are not a representation of 100 stocks; they are a representation of a market cap-weighted index. In other words, these 7 stocks push everything, while the other 93 are somewhat inconsequential.
Be Patient
If there is a “buy everything AI narrative” in the United States, the NASDAQ 100 will have a hard time falling. Because of this, we need to turn to technicals. It looks like the 14,600 level could offer support, perhaps extending in a huge block down to the 14,250 level. It’s also worth noting that the 50-Day EMA is set in that general vicinity as well, and it could offer a bit of support. Another thing that will continue to help the upward pressure of the longer term is going to be money managers out there doing everything they can to chase performance. If we were to somehow drop down below the 14,250 level, I think that’s the end of the trend.
On the upside, if we were to close above 15,250 on the daily chart, that opens up the possibility of another “buy-and-hold” leg in this market, but at this point in time, it’s getting so rich at this level that I think a pullback is desperately needed or at the very least some type of consolidation. I would not be chasing performance up here; I would much rather wait for the value to present itself and take advantage of the “FOMO traders” out there that desperately need to get some type of return. Patience will be paramount.
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