The NASDAQ 100 has fallen just a bit during the trading session on Tuesday as the 14,000 level continues to attract a lot of attention. I do think it is only a matter of time before we break out to the upside and that we are going to see this market continue to go much higher. After all, we are in the midst of earnings season, and the major companies will find a reason to rally going forward. If for no other reason than that, the dips continue to get bought as the market only goes up over the longer term.
I know that is a very lazy way to look at things, but it is actually true. There are times where we have major pullbacks and even meltdowns, but it is only a matter of time before the central bank gets involved to lift the market. What you need to understand is that indices are not made to go down, because if they were, than they would use an equal weighting of each company, not just having a handful of companies make up a majority of the weighting. As long as that is the case, you need to know the game is that eventually we go higher.
This is not to say that you just jump in with both feet, but there is likely going to be buyers on dips. At this point, I look at the 13,700 level as a massive support level based upon the last week or so. Because of this, I think that there will be plenty of value hunters out there looking to get involved. However, if we were to break down below that area, then I think the 50-day EMA would be the initial target for buyers to jump on, and then the 13,333 level. The uptrend line underneath should continue to push this market to the upside, so I do believe that we are looking at a scenario in which it is only a matter of time before you find value that you can take advantage of. If we were to break out to the upside, I believe that the 14,500 level will be the target given enough time, but with the Federal Reserve ending its meeting on Wednesday and all of the earnings noise, it might be a messy ride higher.
