The NASDAQ 100 has been very choppy and quiet during the trading session on Tuesday as we are sitting just above the 50 day EMA. Perhaps more importantly, we are sitting just below a major resistance barrier in the form of 13,333, so it is not a huge surprise to see that we could not break out from there. If we can clear that level, then I think we will go much higher but with Janet Yellen testified in front of Congress during the Wednesday session, it was probably going to be a bit much to ask for it to happen on Tuesday.
The candlestick ended up being essentially unchanged, as we sit not only on the 50 day EMA but also the 13,000 level. I do think that at this point we need to pay close attention to the rates coming out of the treasury market, because technology stocks tend to be extraordinarily sensitive to this. If rates start to rise, that it is very likely that the NASDAQ 100 will see quite a bit of selling pressure.
Even if we did break down from here, I still think there is plenty of support near the 12,800 level, and then eventually the trend line that sits underneath there. Breaking that trendline would be a very negative move, and that could Be buying puts at that point. Again, much like the S&P 500 I will not short this market because it is a great way to get hammered if and when the Federal Reserve steps in to protect everyone.
On the other hand, if Janet Yellen calms the market down, then it is likely that we will break above that 13,333 level, then the 13,500 level would be targeted and most certainly the 14,000 level would be longer-term. We are clearly in a very tenuous situation, so I think it makes quite a bit of sense that we will see chop back and forth, and therefore I am probably going to wait until we get a breakout to the upside before I start putting serious money to work. The NASDAQ 100 has been a very poor performer over the last couple of months, but it does look like we are trying to form some type of basing pattern and perhaps even an “inverted head and shoulders.”