I think it is only a matter of time before we can buy the market based upon the “Jerome Powell put.”
The NASDAQ 100 initially shot higher during the trading session on Monday to show signs of strength again but seems to be struggling with the idea of overcoming the 15,000 level. Although it did look very bullish in the beginning of the day, it is obvious that we had given back quite a bit of strength, and it looks like we continue to just simply hang on the uptrend line that we have on the chart right now. That being said, even if we break down through the uptrend line, I do not necessarily think I would be a seller.
Looking at this chart, it is worth noting that the Monday candlestick was a shooting star, which is a very ugly candlestick to look at. Ultimately, if we can turn around and break above there then it is likely that we could go looking towards the highs again, and perhaps even as high as the 15,500 level above there. After all, the market does tend to move in 500-point increments, so it certainly makes sense that we would see that scenario play out going forward as well.
To the downside, the 50-day EMA is at the 14,450 level, which a lot of people would be attracted to, as it is a widely followed technical indicator. If we break down below there, then the 14,000 level would be the next support level. Beyond that, then you start to talk about the market breaking down towards the 200-day EMA, and I would be a buyer of puts but I would not be flat-out shorting the index, because the central bank has a nasty habit of picking the market up if there is any hint of somebody on Wall Street getting hurt. With that, I think it is only a matter of time before we can buy the market based upon the “Jerome Powell put.” That does not necessarily mean that we will not correct, but that correction will more than likely be looked at as a potential buying opportunity, offering the market participants the possibility of picking up the NASDAQ 100 “on the cheap.” It is all about value hunting more often than not, so I would certainly look at it as a potential move. If we do break out to the upside, that obviously would be a very bullish sign, but you can also make an argument that it would simply be a continuation.