The NASDAQ 100 sold off quite drastically on Wednesday as we pierced the 16,000 level. That is partly due to the fact that interest rates have risen quite drastically during the trading session, so it does tend to work against the value of stocks. Quite frankly, there is a lot of concern out there about the extraordinarily high inflation numbers from the United States, so if we have very little growth and an extreme amount of inflation. That would end up being stagflation, which is the absolute worst scenario for the stock market.
Underneath, I do believe that there is a significant amount of support near the 15,500 level, especially as the 50-day EMA is reaching towards the level. The 50-day EMA is rallying significantly to go looking towards that area, and I think that might be where we converge to find plenty of buyers. This does not necessarily mean that I am willing to jump “all in” right away, but I do recognize that the NASDAQ 100 is in the midst of a healthy correction, something that has desperately been needed. The market will continue to be very noisy, so be cautious and patient enough to wait for some type of value and bounce that we can get involved in.
If we were to break down below the 50-day EMA, then maybe we will go looking towards the 15,000 level, but I think that is about as negative as we get. The market will continue to see a lot of concern, and we are in the middle of the earnings season, which makes for a lot of back-and-forth trading as well. If you wait a couple of days, you could get a nice buying opportunity. I do not short US indices, because the Federal Reserve gets in the way every time you try to do that. The market will continue to be very noisy, but US indices are only traded to the upside, at least since the Great Financial Crisis. The Tesla recovery could help in that manner as well, as we did see a little bit of stabilization during the session.
