- The NASDAQ 100 rallied significantly during the trading session on Monday, to reach an area that is threatening a new all-time high.
- Short-term pullbacks at this point will make a certain amount of sense, as we are getting stretched, but I think given enough time we will probably continue to see buyers jump into this market to take advantage of the market every time he gets a little cheaper.
- That being said, we also need to look at this through the prism of the end of the year, and that could have a major influence on where we go next.
Liquidity Issues Coming
Keep in mind that as we head into the holiday season, does make a significant amount of sense that we would see buyers jumping in to pick up these debts, but at the same time, it’s very likely that we also see a significant amount of liquidity disappear from the market, especially as we head into next week. If you are already long of this market, then you need to start thinking about taking profits, because you don’t necessarily want to be the last one out of the door. All things being equal, think there is plenty of buying opportunities on short-term pullbacks, but this is going to be an almost daily process.
A market move breaking above the 16,800 level could be a significant breakout for a longer-term move. The fact that we are overdone the way we are does suggest that eventually, we will get a certain amount of volatility going forward, and of course that lack of liquidity will only increase that. Any short-term pullback at this point is probably a buying opportunity but I think you need to be very cautious. Each day should be thought of as a day trading opportunity, and therefore not necessarily something that you should put a lot of money into. With this, you have to keep your trading process a little bit different than usual, but obviously, there’s only one way you can trade this market.
Potential signal: The NASDAQ 100 remains bullish, but it will be very volatile. Every time this market pulls back 50 points, I will put in a small position and try to pick up a little bit of profit. However, I will risk one-half of my normal position at the very most, and if I have 2 losses in a row, I’m done for the year.
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