- The NASDAQ 100 initially fell during the trading session, but it does look to me like it is trying to find its footing here near the 20 day EMA.
- The market was overdone, but the consumer price index came out hotter than anticipated in the United States, and therefore the market freaked out.
They begin to worry about whether or not the Federal Reserve is going to loosen monetary policy and that's what the stock market is. Is there loose money? Then stocks go higher. If there's not loose money, then stocks go lower.
It has nothing to do with corporate earnings, the economy itself, or anything else. It's all about Federal Reserve monetary policy. After all, the market has been trained to behave like this since the great financial crisis. The 20 day EMA offers a little bit of support, but if we break down below there, then the 16,950 level is the next area of support. Ultimately, I would not be surprised at all to see this market turn around and shoot towards the highs of the day again. This was a knee jerk reaction facilitated mainly on the algorithmic traders and AI type trading out there.
Nobody truly believes that the Federal Reserve is going to tighten money and passive investing dictates that seven stocks get most of the inflow. So, this is basically an ETF on those seven stocks. Yes, this is needed. Yes, we could fall further, but quite frankly, at the end of the day, we're still very much in an uptrend. So this has to be looked at as a potential buying opportunity. If you're scaling in, I don't know that I would jump in with both feet, but clearly this is a market is more bullish than bearish and should continue to be so.
The NASDAQ 100 continues to be the favorite vehicle of traders when it comes to stocks, and therefore you need to be long only, or at the very least – not short of this market. The same handful of stocks continue to drive everything in this index, and therefore you have to pay attention to the seven big ones at this point.
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