Pay close attention to the bond market, because if yields start to spike again, then it’s possible that we will see the NASDAQ 100 take a real beating.
- The NASDAQ 100 Index gapped lower to kick off Friday as the jobs number in America showed that there were over 500,000 jobs added during the month of July.
- As the market got wind of this, it started to sell off as interest rates in America started to rally.
- Because of this, a lot of pressure came in on the stock markets.
Keep an Eye on 13,000
The 13,000 level underneath should be an area of interest, as it was a previous resistant barrier. However, what we will truly be paying attention to is what happens this week, because if we were to break down through that level, it could continue the run lower. On the other hand, if we break above the 13,500 level, then it’s possible that this market will go much higher. The market break above the 13,500 level would be a massive turn of events, but I don’t see that happening without some type of dovish behavior out of the Federal Reserve.
Ironically, the Federal Reserve has been trying to explain to the market how they are not dovish all week. It was not until we sold the jobs number coming as hot as it did that Wall Street started to accept this as reality. Remember, Wall Street is about getting handouts from the Fed, not trading the economy. This is a mistake that the Federal Reserve has made over the last 14 years, and now it has to deal with the addiction that they have forced upon the street. Now that they actually have to pay attention to the economy, the Federal Reserve has to convince an entire generation of traders that there are things beyond loose monetary policy that can be factored into an asset.
If we do break down, the 12,250 level will be interesting to pay attention to, due to the fact that it was previous resistant and of course the 50-day EMA is hanging around in the general vicinity. Pay close attention to the bond market, because if yields start to spike again, then it’s possible that we will see the NASDAQ 100 take a real beating. On the other hand, if yields start to fall, that should be good for this market, as it brings in more “cheap money” from the Federal Reserve, at least that’s the thinking.