- The NASDAQ 100 continues to exhibit a positive outlook in the early hours of Monday's trading session, albeit against a backdrop of limited economic announcements that could stir market movements.
With a relatively quiet economic calendar, the likelihood of a modest pullback looms on the horizon. However, any such pullback is expected to present opportunities for buyers. Despite initial concerns about the Federal Reserve's commitment to maintaining a tighter monetary policy, sentiment took a turn on Friday, reflecting a steadfast appetite for stocks. This persistent demand persists despite the absence of compelling reasons for the Federal Reserve to alter its stance.
It is essential to grasp that the NASDAQ 100 is primarily propelled by a select few stocks, effectively resembling an Exchange-Traded Fund (ETF) when taking a long position. This is the absolute joy of passive investing, it pushes everyone into the same stocks, and therefore will cause a crash someday. (Sarcasm, but true.)
Short-term Pullbacks = Buying Opportunities
Short-term declines should be perceived as potential entry points into the market, with a particular focus on the 17,000 level, which offers value on the upside. The next target in sight appears to be the 18,000 level, which is a mere 400 points away. The prevailing market dynamics are predominantly driven by momentum, and there are indications that momentum may be making a comeback.
At present, the NASDAQ 100 hovers near the upper boundary of a consolidation range. To sustain and foster upward momentum, the market necessitates a resurgence of enthusiasm among traders, a recurrent pattern observed in past market behavior. Importantly, shorting this market does not appear to be an attractive or prudent strategy.
At the end of the day, the NASDAQ 100 maintains its bullish trajectory, with the potential to approach the 18,000 level in the near term. However, it is vital to acknowledge that this ascent may not unfold linearly. Market participants should exercise vigilance and be prepared to seize buying opportunities that may arise amid short-term pullbacks. The NASDAQ 100's performance remains intricately linked to the sentiment surrounding a handful of influential stocks and the broader momentum shaping the index.
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