- The NASDAQ 100 gapped lower to kick off the week on Monday but turned around to show signs of life.
- By doing so, it looks as if we are going to have a short-term relief rally.
- I don’t necessarily think that this market is ready to take off to the upside, and I do anticipate that it is probably only a matter of time before we see sellers come back in and push this market lower.
The 50 Day EMA sits at roughly 12,780, so I think it could offer a little bit of a technical barrier. Signs of exhaustion near that indicator could get me short because I think it might be a nice opportunity. The NASDAQ 100 is going to be very sensitive to a rate-tightening cycle, as so many of the market movers are high-growth companies. Because of this, the market will probably continue to see a huge correlation between rising rates and falling NASDAQ.
NASDAQ Likely to Bounce Back Despite the Noise
Pay attention to the usual 7 or 8 companies, meaning Tesla, Microsoft, Amazon, etc. Those companies move this market, and the other 93 or so don’t really matter most of the time. The market will continue to be very noisy, though I think it’s probably only a matter of time before the sellers come back in and push this market toward the 12,000 level. The Friday candlestick was massive, and it can 6 like that typically do not happen in a vacuum, and therefore I think it’s probably only a matter of time before those who suffered horrific losses that day will be looking to get out of the market as close to as breakeven as they can.
I continue to fade rallies, and I think we are now looking at the next move lower just waiting to happen. If we break down below the bottom of the candlestick on Monday without any type of retrace, that’s probably even more bearish, sending this market further down. Either way, I do not have any interest in buying this market until we can break above the recent high near 13,750. Until then, I’m very leery of rallies and I look at this as a market that needs to prove itself, especially after the tantrum that we saw on Friday. Position sizing will be crucial as usual, as we continue to see a lot of anxiety.
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