S&P 500
During the session on Monday, the S&P 500 sold off rather drastically, slicing through the 2000 level at one point. That’s a very negative sign in my opinion, but at the end of the day we did bounce almost 20 points above there, showing that there is most certainly still some buying interest when it comes to this index. I believe because of this that the market will continue to be very volatile.
When we zoom down to the shorter-term charts, such as the one-hour timeframe, you can see that the bounce was rather significant. I don’t think that if we can break above the top of the bounce for the day, this market could go higher. I think it will be more of a grind than anything else, and quite frankly it’s going to take a lot of wherewithal to hang onto the trade but it should pay off. On the other hand, if we fall below the 2000 level again, I feel that this market could drop pretty significantly.
NASDAQ 100
The NASDAQ 100 did almost the exact same thing during the day, only replacing 2000 with 4500. I think that there is a significant amount of support just below the 4500 level, and extending down to the 4450 level. Because of this, the market will more than likely continue to find buyers in this general vicinity. If we can break above the bounce from the day, I don’t see any reason why this market won’t reach back towards the 4600 level given enough time.
You have to keep in mind that this is the beginning of the year, and quite frankly that means a lot of big money will come into the market input positions on. This causes a lot of volatility as you have a lot of players working on different time frames throwing money into the market. That being said though, if we do break down below 4450, the NASDAQ 100 falls drastically.
