The NASDAQ 100 has gone back and forth during the trading session on Monday to form a massive neutral candlestick. This shows just how lost the market seems to be at the moment, as various external factors continue to cause problems. The first one is the geopolitical issues facing the world, most namely the Ukraine/Russia conflict. As long as that is an issue, stocks will continue to be jittery at times.
You should also keep in mind that the NASDAQ 100 is highly levered to the idea of growth. After all, it is quite literally a technology-driven stock index, so therefore it needs a high-growth multiple to continue to reach the upside. In the environment that the market finds itself in right now, it is difficult to get overly excited about any type of growth. The global pandemic has pushed forward quite a bit of demand, and although things may be showing a lot of demand right now, the reality is that we may not be able to hang onto the rate of change very long. It very much looks like a market that is going to continue to find plenty of sellers above.
Going forward, if we break down below the lows of the trading session on Monday, it could open up a move towards the 13,500 level rather quickly, followed by the 13,000 level which of course is a large, round, psychologically significant figure and an area where we have seen a bounce from previously. If we break above the top of the candlestick for the Monday session, then it is likely we go looking towards the 14,500 level, an area that has been important more than once. Keep in mind that we are getting ready to form the so-called “death cross” when the 50 day EMA breaks down below the 200 day EMA. That is a bearish signal, but it is quite often late, especially now that the news cycle seems to be five minutes at a time. As long as that is going to be the case, that indicator probably is not as effective as it once was. I think the only thing you can count on is a lot of jittery behavior, and therefore volatility will most certainly pick up yet again, causing the markets to be vulnerable.
