I will be waiting on the sidelines for the next 24 hours until I put any money to work on Monday as it could be a much clearer situation by then.
- The NASDAQ 100 Index has gone back and forth during trading on Thursday
- We continue to see the market focus on inflation and whether or not the Federal Reserve is going to be involved.
- The market is likely to get a bit of resolution after the Non-Farm Payroll number on Friday, as traders are trying to figure out whether or not the Federal Reserve is serious about tightening monetary policy.
It’s amazing how many Federal Reserve members have come out during the past week and discussed that the Federal Reserve is serious about tightening rates and fighting inflation, so you should keep in mind that once the market “gets it”, it could be a very vicious turnaround. However, if the inflationary headwinds start to abate, that could cause another melt-up. When you look at the fundamental information out there, there’s no real reason for this to be happening other than hope
If the market were to turn around and break down below the 13,000 level, that gets in this market much lower, but I think the only thing you can count on is a lot of volatility and noise. The 50 Day EMA sits just below the 12,250 level and is curling higher. That’s an area where people should start to pay close attention to for support, and if we were to break down below that level, it’s likely that this market goes much lower.
I think the only thing you can count on here is going to be a lot of noise, therefore it’s likely that we would see a lot of back-and-forth trading, therefore you need to be very cautious. Nonetheless, it will be interesting to see how we close on Friday because it could give you an idea as to how much faith people have in the market because holding on to a position for the weekend speaks volumes. If the market cannot do so, then it shows you that they have no real belief in this rally, and we probably have further to go to the downside. Either way, I will be waiting on the sidelines for the next 24 hours until I put any money to work on Monday as it could be a much clearer situation by then. However, the proof will be in the price action.