The NASDAQ 100 went back and forth on Friday as we continue to see a lot of volatility. We initially fell apart, but it is worth noting that as we headed into the weekend, there were a lot of options expiring in New York. In fact, it was worth something along the lines of $2 trillion. Because of this, the market is likely going to be one that you cannot read too much into on the Friday close, due to the fact that a lot of movement was necessary due to options expiring.
That being said, it is worth noting that the geopolitical concerns continue to be a major issue, and then we also have the specter of inflation. Both of those are negative things for growth stocks, which of course make up the bulk of what we see pushing the NASDAQ 100 overall. With this being the case, I do think that it is only a matter of time before we sell off again, but we may get a short-term relief rally. Keep in mind that bearish markets tend to have nasty recovery rallies from time to time, so it could be rather impressive in the short term. That being said, I still think that the 200 day EMA will offer a significant amount of resistance near the 14,869 level, so it is going to be difficult to get above there. With this, I am looking for rallies that I can fade on signs of exhaustion, as the market will continue to be one of concern more than anything else.
Another thing that we could pay close attention to is the US dollar, because if it starts to strengthen that might be a sign of concern and “risk off”, which of course works against the NASDAQ 100 in general. Because of this, I think it is probably only a matter of time before we see plenty of sellers coming back. But if we were to take out the 200 day EMA, you might be able to make an argument for a reversal. Right now though, that does not seem very likely, as the weekend was probably the only thing that saved the market in general. Options expiration makes the candlestick on Friday something that should be taken with a grain of salt.
