The NASDAQ 100 initially tried to rally during the trading session on Wednesday but then pulled back just a bit to show signs of hesitation yet again.
NASDAQ 100
The NASDAQ 100 initially did rally a bit during the trading session on Wednesday but gave back some of the gains later in the day. All things being equal, this is a market that I think continues to grind to the upside, perhaps trying to reach highs near the 16,900 level. That being said, you need to keep an eye on the Thursday and Friday sessions as we have inflation numbers coming out.
Thursday will feature the Consumer Price Index, which of course will have a strong read on what happens in the bond market. If inflation seems to be cooling off, that will turbocharge technology stocks, as well as all stocks on Thursday, as we would see a lot of money flowing into the markets, chasing the idea of further rate cuts by the Federal Reserve, even though they have even started to do so yet.
Beyond CPI
We also have the Producer Price Index numbers coming out on Friday, which also shows a bit of what’s going on in the US economy. All things being equal though, I think that as long as inflation continues to drift a little bit lower, we will see buyers coming into the market to try to pick up stocks due to “cheap money” coming down the road. All things being equal, it’s also worth paying close attention to the idea that traders will continue to look at monetary policy as the main driver of what happens with stocks.
Underneath, we have the 20-Day EMA near the 16,500 level and it currently is rising. I would be your short-term support level, and then after that, we would see a move down to the 16,000 level, which also features the 50-Day EMA. All things being equal, this is a market that continues to see buyers in a dip.
Potential signal: the NASDAQ 100 is a market that you cannot short any time soon. Yes, it is overbought in the last couple of months, but it’s obvious that Wall Street is chasing performance, and we will have to pay close attention to the bond market. On a move down to the 16,500 level, I would start to put on a small position. I would add even more at 16,000 underneath. This is more or less a longer-term investment, not a short-term trade so I fully anticipate that the NASDAQ 100 will continue to go higher and make a fresh, new high. Longer-term, we could be looking at 17,000.
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