The NASDAQ 100 has been very bullish over the last month, breaking above a significant barrier in the form of 14,000 during the last week of June. It is also the top of an ascending triangle, so I think at this point it suggests that the stock market is ready to go higher. That does not necessarily mean that it will go straight up in the air, but based upon previous technical analyses and the “measured move” of the triangle, we are probably looking at a move towards the 15,000 level, possibly even as high as 15,200 over the next several weeks.
Keep in mind that there has been a bit of a rotation into technology again, which will help the NASDAQ 100 go higher due to the fact that it is driven by just a handful of stocks such as Apple, Microsoft, Amazon and Alphabet. In fact, it is all of the “usual suspects” that tend to drive the market, so I believe that anytime you get a bit of a pullback, it is probably going to offer you a nice value play. I think that not only does the 14,000 level make sense as support, but I also believe that the 13,750 region is probably supportive as well based upon the volume profile.
Keep in mind that if we do get some type of major “risk off event”, that could change things, but as long as we can stay above the 12,500 level, we are still very much in an uptrend. Even below there I would only be a buyer of puts, because shorting these markets is a very dangerous thing to do when the Federal Reserve is willing to jawbone the market right back up. If that does not work, they will start to do things like buy corporate debt. In other words, the Federal Reserve will not allow this market to break down too significantly, so flat-out shorting this market is a very dangerous thing to do. However, if you buy a put, then you at least mitigate the amount that you could lose when they jump back in. I do think that we have a lot of bullish pressure underneath.
