- The NASDAQ 100 has rallied a bit during the trading session on Monday as we see a lot of volatility out there.
- The US dollar took a bit of a break from its bullish run, and that has helped the overall situation, but at the end of the day, the NASDAQ 100 is still going to see extreme bits of volatility.
- Volatility is most certainly not your friend when it gets out of hand. Because of this, we are more likely than not going to see the NASDAQ run into a major selloff sooner rather than later.
Changing Overall Market Structure
The 200-Day EMA sits at roughly 13,250, and we would need a break above there to make a true statement and change in the overall market structure. While things do look rather bullish in the short term, the reality is that the rallies tend to be very low liquidity, and in thin volume. This does not suggest confidence long term. In fact, I think it’s probably a situation where you have a lot of uncertainty waiting to bubble to the surface.
If we break back below the 12,600 level, then I think we end up going back down to the 12,000 level. The 12,000 level course has a certain amount of psychology attached to it, but at the end of the day, I don’t necessarily think that there is anything particularly important about it other than the fact that we bounce from there previously. That would make it essentially a short-term support level, but macroeconomics dictate that we are going to continue to have a lot of issues, to begin with. Because of this, I think we have a situation where the market still is one where you want to fade exhaustion, but we just have not seen it play out yet.
Keep in mind that there are only a handful of stocks moving the NASDAQ 100 at any time, so pay attention to all the usual suspects that most flunkies own. This would be Tesla, Microsoft, Amazon, etc. The lack of volume has had these market stalwarts truly make an outsized impression yet again. While that’s not necessarily anything new, it’s especially true in these low-volume environments. With the CPI numbers coming out on Tuesday, you can expect a lot of volatility during the day.