NASDAQ 100 Forecast: Bounce From Significant Support

The NASDAQ 100 fell rather hard during the trading session on Monday but found plenty of support underneath to turn things around and form a massive hammer. The 15,000 level is a large, round, psychologically significant figure that a lot of people will pay attention to, as we have seen multiple times. The shape of the hammer is of course a very bullish sign, and we should also keep an eye on the idea of the uptrend line holding.

If we were to turn around a break down below the uptrend line and by extension the bottom of the candlestick, then it opens up a move down towards the 50 day EMA underneath. The 50 day EMA of course is an indicator that a lot of people pay close attention to, as it has offered both support and resistance previously. The 14,500 level of course attracts a certain amount of attention, just as the 14,000 level would underneath. The market will clearly look at pullbacks as a potential buying opportunity on dips, as the market has been so strong for so long, and of course interest rates stay low helps the idea of “growth stocks” go higher as there is no yield. As long as that is going to be the case, the NASDAQ 100 would of course be an area where we see a lot of growth stocks appear, and therefore drive this market much higher.

I expect a lot of noise going forward, but ultimately what we are looking at here is a very choppy and consolidated market, after making a huge move to the upside over the last several months. It should also be noted that this is the month of August, which is typically the quietest time of the year with the exception of the week between Christmas and New Year’s Day. Because of this, it is very difficult to imagine a scenario where I would put a ton of money into this market, but I certainly would be a seller of the market. If we break down below the 50 day EMA, then I might be a buyer of puts, but that is about as rough as I get with this market to the downside due to the fact that the Federal Reserve will continue to keep that monetary flow loose, and that of course is a major driver.