- The NASDAQ 100 initially tried to rally on Thursday but gave bank gain as we continue to hesitate near the 11,600 level.
- This is a market that is going to be paying close attention to the jobs number coming out on Friday, as the Non-Farm Payroll announcement has a huge influence on what happens next.
- After all, people are worried about what the Federal Reserve is going to do and whether the monetary policy is going to continue to be tight.
In other words, if the jobs number is strong, people will start to extrapolate that the Federal Reserve will continue to see the need to tighten monetary policy, which works against high-flying technology stocks. Remember, it’s just a handful of stocks that moves the NASDAQ 100, so you need to pay attention to all the usual suspects such as Tesla, Microsoft, Amazon, and Alphabet, as well as a few others. They need a high-growth environment to really push things going forward, so you only get that when money is cheap and easy, or the underlying economy is strong.
Traders May Keep Ignoring the Federal Reserve
If we do fall from here, the 11,000 level will be a very interesting area to find support at, because it’s basically where we bounce from previously. If we were to clear that to the downside, it opens the NASDAQ 100 to much lower pricing. At that point, I would anticipate that the 10,500 level could be a target, followed by the 10,000 level. On the other hand, if we turn on a break above the highs of the last couple of days, then we could go looking to the 12,000 level, which is where the 50-Day EMA currently resides. Breaking that could get me a bit more bullish, but right now I don’t think that’s very likely to happen.
Yes, Wall Street will find a way to think that the Federal Reserve is going to be loose again, but the reality is telling a completely different story, not to mention the fact that the people who make the decision that the Federal Reserve are telling a different story. Most of this is due to the Federal Reserve keeping monetary policy extraordinarily loose for 14 years, and they have raised and then tired generation of traders that have no idea how to conceive of trading stocks without cheap money.
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