- The NASDAQ 100 had a tough trading session on Tuesday, as we broke through the 50-Day EMA.
- That being said, there is the psychological importance of the 15,000 level that we will have to pay attention to, so I think that comes into play over the next 24 hours.
- However, breaking down below there then opens up even deeper correction, which is something that a lot of traders will be looking for.
At this point, the entirety of the market is holding its breath and waiting to see what the Federal Reserve is going to say during the trading session on Wednesday. In general, this is a scenario where the interest-rate decision is already expected to be a non-decision, but we will have to worry about the press conference in general. The press conference could lead traders to freak out, worried about Jerome Powell tightening longer than anticipated. That being said, we have seen this pattern multiple times, where traders will hear something bad, start selling, and then turn around and start buying the latest narrative. There is no reason to think that the NASDAQ 100 is going to act any differently at this point.
A Lot of Things Could Change
Because of this, I do think that the market is setting up for a potential buying opportunity on some type of value play, but the question is whether we get that stabilization right away on Wednesday, or if we do pull back a little bit further. I’m somewhat banking on the idea of the NASDAQ 100 falling a bit further, and although I would never short this market, because quite frankly it’s too concentrated in just a handful of stocks, the reality is that I am willing to sit on the sidelines and look for an opportunity at lower pricing. In fact, this is a situation where the markets will have to pay close attention to the idea of finding value, and a little bit of fear could go a long way.
With this, I am including a potential trade setup at the end of this article, but I also recognize that a lot of things could change. What I hope to see is some type of significant breakdown, and then turn around and pick up value.
Potential signal: Buy the NASDAQ 100 on a dip, after the press conference. I would be entering near 14,900 with a stop at 14,750. I am aiming for a recovery above 15k, with an eye on 15,121.
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