NASDAQ 100 Forecast: Previous Rough Session

Christopher Lewis

The NASDAQ 100 has gone back and forth during the trading session on Thursday as we continue to see a lot of volatility. The 14,000 level has offered a bit of trouble for the market, but at this point in time I think it is only a matter of formality before we break above the top of the range. If we do break above the top of the range for the trading session on Thursday, it opens up the possibility of a move to the 15,000 level, with the 14,500 level offering a significant amount of short-term resistance.

If we did break down below the bottom of the range for the trading session on Thursday, then the market will look at the 13,700 level as short-term support, and then eventually the 13,500 level is even more support near the 50 day EMA. The 50 day EMA of course is technically important, so I think a lot of people would stand up and take notice. This is an index that tends to run away for people so a pullback like that probably attracts a lot of buyers based upon value if nothing else. After all, the NASDAQ 100 has been a highflyer for quite some time and momentum is something that does not suddenly stop.

If we do break down below here, the 13,000 level is essentially the “floor the market” that I see. Below there, I would be a buyer of puts but I would never short this market out right. That is a recipe for massive losses, because it would only be a matter of time before the Federal Reserve will step in and say something to turn the market around, much less start buying things.

All things been equal, this has remained a “buy on the dips” situation for years, and it is very difficult to imagine that scenario changing anytime soon. Remember that the NASDAQ 100 is not an equal weighted index, and that means that people are focusing on roughly 5 or six stocks to push this thing higher. As long as that is going to be the case, and those are the “cult stocks” that everybody buys, by definition the NASDAQ 100 only has a certain amount of downside to it under normal circumstances. As long as liquidity is out there, this is where money will flow to given enough time.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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