The NASDAQ 100 got crushed on Friday as Jerome Powell has finally talked the market into believing the fact that he is trying to fight inflation. In other words, interest rates will continue to be high, and that absolutely crushes growth stocks. Growth stocks make up the major push in this market, therefore it’s likely that we continue to go lower.
We are now below the 50-Day EMA, and closing at the bottom of the candlestick. In other words, it’s very likely that we continue to go lower, and therefore I think that we have now entered the next phase of the bearish market. If we break down below the bottom of the candlestick, we could see this market go down to the $12,000 level. Breaking down below there then opens up the possibility of a move down to the $11,000 level.
Looking for Signs of Exhaustion
- If we do rally, I will be looking for signs of exhaustion that I can start shortening, especially with the 200 Day EMA sitting just below the $13,500 area, which is where we topped out at.
- I think this is a market that continues to see a lot of negativity unless of course the US dollar suddenly changes this trajectory, something that I can’t see happening based on interest rates and what they are doing right now. Markets are all over the place, but it certainly looks as if a lot of people got on the wrong side of the trade.
- This is a scenario where I will be looking at an opportunity every time we get a rally and exhaustion, and therefore I will be watching this chart very closely.
The market certainly seems to have gotten a bit of a shock, and the fact that we are closing at the very bottom of the candlestick does suggest that we have further to go. In this scenario, I am very aggressively short on a breakdown, or at the first signs of an exhausting candle. I do like the idea of shorting the NASDAQ 100, and I think that it’s needed to happen for quite some time as the stock market has continued to ignore reality, but it got a huge dose of it during the Jackson Hole Symposium speech. 14 years of spoon feeding Wall Street has caused this train wreck, now it’s up to the Federal Reserve to end it.
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