The NASDAQ 100 initially fell during the trading session on Monday, as a lot of traders continue to buy dips going forward. The technology companies have been beaten down, but I believe that the NASDAQ 100 can still be bought occasionally. Nonetheless, I think what we are looking at here is a scenario where the NASDAQ 100 will lag the other sees in America, as we are starting to see a major rotation from highflying growth companies to the value companies that are more abundant in the S&P 500
To the upside, if we break higher, we will go looking towards the 13,000 level as resistance, and then again at the 13,333 level. Breaking above that level could send the market higher but ultimately, I think what we see here is a market that is going up enough momentum to trying to go higher. There is a significant uptrend line just underneath that could come into play as well, so I would think that sooner or later we would see buyers coming back in.
If we do break down below that uptrend line, then it is possible that we could be looking at a move down to the 200 day EMA, where I think a lot of longer-term technical traders would get involved. The breaking of that is by definition a downtrend, but I as a general rule will not short indices in America because as soon as a pickup serious momentum, the Federal Reserve steps in and squashes price discovery. Because of this, worst case scenario I am a buyer of puts in a situation like that because then I know that there is only a certain amount of money I can lose.
If we can break above the 13,333 level, it is likely that the market would go looking towards the highs again just underneath 14,000 above. Breaking that of course opens up the possibility of move to the 15,000 going forward which of course is a large, round, psychologically significant figure. Nonetheless, I do think that we go higher over the longer term, but it is probably going to be very difficult, and you are probably going to see more likelihood of higher returns in the S&P 500 or even the Russell 2000 at this juncture. Buying the dips continues to work, but with a certain amount of patience and a reasonable position size.