- The NASDAQ 100 initially rally during the trading session as it look like Wednesday was going to be more of the same that we had seen during the Tuesday session.
- After all, CPI numbers came out weaker than anticipated on Tuesday, and that immediately had everybody on Wall Street looking for that “cheap and easy money” that they have been getting for the last 14 years or so.
- This is a mistake that the Federal Reserve has made, liquefying the markets, and thereby running more money into Wall Street and the top 1% then the rest of the economy.
- Because of this, Wall Street is a creature of habit, and therefore they expect that as soon there are signs that the economy slowing, the Federal Reserve will come to bail everybody out. However, it is a bit different at the moment due to the fact that inflation is “sticky.”
While I have no doubt that the Federal Reserve will eventually cut rates, we are much further away from it than Wall Street understands. The CPI number of 3.2% that we got on Tuesday that had everybody excited is a far cry from 2.0%, which is what the Federal Reserve demands happen. Nonetheless, there’s always a narrative to buy stock so it’s difficult to short the NASDAQ 100, especially as the usual suspects make up an inordinate amount of volume. Quite frankly, everybody is in Tesla, Apple, Microsoft, etc., and therefore the market is very difficult to short.
Be Patient
This is not to say that we can pull back, and quite frankly I think we do pull back from here because we are so overextended. We have gained 2800 points in roughly 2 ½ weeks, so perhaps it’s time to slow down.
While I would not short this market, I think that we have a pullback coming that you can at least pay attention to, and perhaps try to find value. Somewhere near the 50-Day EMA might be a potential entry point, right along with the 15,250 level. I know that typically the best way to lose money in a market is to chase a trade that has already happened, which unfortunately some people were doing during the day on Wednesday and will probably lose money. A little bit of patience could go a long way in this market.
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