To see this market turnaround for a longer-term end, we would need to see some type of change in the Federal Reserve and its attitude overall.
- The NASDAQ 100 has fallen rather hard during the trading session on Thursday as we have sliced through the 11,900 level. The market is likely to continue going lower, and short-term rallies should end up being selling opportunities.
- At this point, the 12,000 level above could be a significant barrier, and I think it’s going to take some effort to get above there.
- However, we also need to recognize the fact that anything is possible and bear market rallies tend to be some of the most vicious.
The 50-Day EMA sits just above the 12,500 level and is dropping from here that ultimately, this is a market that I think is ready to be a “fade the rally” type of situation, which is how things have been for a while. Yes, we had that whole narrative of “the Federal Reserve is going to pivot” that caused the balance during the summer, but reality seems to have stepped back into the picture. The Federal Reserve is going to raise by at least 75 basis points next week, but I think the trading public is still asleep at the wheel because the Federal Reserve is likely to continue raising rates for the foreseeable future.
Look at Exhaustion Signs as Opportunities to Short
The 11,000-level underneath had been a massive barrier the last time we got down there, so I think that might be your target. It’s not to say that it will be easy to get there, just that it might be where we go eventually. I do like the idea of shorting every time we get the opportunity, but you are going to need to let the market show exhaustion before you start shorting, because these bear market rallies can be extraordinarily extended.
If we break down below the 11,000 level, it’s likely that we go much lower. If we break it down below there, then the 10,000 level is quite likely to be a significant support level, especially as it is a large, round, psychologically significant figure. Whether or not we get there is still an open question, but it certainly looks as if we are going to start grinding in that direction. To see this market turnaround for a longer-term end, we would need to see some type of change in the Federal Reserve and its attitude overall.