The NASDAQ 100 has fallen again during the trading session on Thursday as we continue to see a lot of negativities out there. After all, the NASDAQ is highly sensitive to the interest-rate markets, and therefore you need to be very cautious about how much money you put to work right away, as the market continues to be very dangerous to say the least.
I think this is a situation where you need to be cognizant of the fact that rallies will continue to see significant selling pressure. After all, the NASDAQ 100 is primarily driven by a handful of large technology companies, which rely on big growth. Growth almost always happens when you are looking at a situation where money is cheap. However, with higher interest rates, it makes sense that we will continue to see money get expensive, and therefore these technology companies will have issues.
Waiting for Signs of Exhaustion to Short the Market
- I think this market goes down to the 11,000 level over the longer term, but it could take some time to get there. Between now and then, I’m looking at this as a market that you should be fading short-term rallies that show signs of exhaustion.
- As soon as we get the signs of exhaustion, I have no hesitation in shorting.
- After all, the trend is most decidedly negative, and I think at this point we are simply trying to get to the lows again.
- If we break down below the 11,000 level, then it’s likely that we go to the 10,500 level, possibly even down to the 10,000 level.
Rallies will probably see a lot of resistance at the 12,000 handles, just as the 50-Day EMA has been sitting just above and getting involved as well. Ultimately, I think that we would have to break through at least all of that to start thinking about going long. The market will continue to be very noisy in general, but I just don’t see how things change anytime soon. Jerome Powell was insistent on the idea of tightening monetary policy, so unless something changes quite drastically, it’s impossible to imagine that stocks are suddenly a favored financial asset. Furthermore, earnings, and maybe more importantly, earnings estimates, have been coming down sharply and that of course works against the value of stocks also. The market will continue to be negative.
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