The NASDAQ 100 has initially tried to rally during the day on Thursday to continue the recovery that kicked off on Wednesday after the FOMC meeting. However, we have seen a complete turnaround during the trading session, showing signs of a complete capitulation almost as soon as New York City opened. With this being the case, the market then crashed into the 50 day EMA. We are closing towards the bottom of the range, which of course is a very negative look, and at this point it seems as if the market is not completely convinced that the Federal Reserve is not going to do serious damage to the economy.
Now the question is going to be whether or not the markets will continue to go lower. At this point, there is a significant amount of support at the 15,800 region, so it will be interesting to see if that can hold. If we do break down below that level, we could start to see a significant move lower in the NASDAQ 100, but I do believe that is probably going to be temporary at best. At that point, I might be willing to buy puts, but I think the 15,000 level will cause a major amount of support.
On the other hand, we may simply turn right back around to kick off the session and consolidate back and forth. After all, this is a market that has been sideways for the last couple of weeks, and as we are getting towards the end of the year, it makes sense that there might be a bit of a struggle for grasp, as liquidity could be an issue, and of course the traders out there simply not wanting to put a whole lot of money into the market and risk a good statement for clients.
At this point in time, I think we are more likely than not to see buyers on dips, but we could also have a little bit of follow-through based upon the way we close. Either way, keep in mind that the noise will continue to be almost unbearable for the next two weeks, especially as liquidity drops off and moves might be sudden. The Federal Reserve talking about tightening and possibly accelerating, while the Bank of England has already raised rates suggests that the “easy money” has been made in stocks.
