- The NASDAQ 100 Index has broken down significantly during the trading session on Friday, to slice below the 11,000 level yet again.
- At this point, the NASDAQ 100 continues to take a bit of a beating, as we have seen so much in the way of downward momentum.
- With the way things are going, I do think that we had a fresh, new low, and it is probably only a matter of time before you break down below there.
Heading Into the Earnings Season
The 10,000 level is a very real target at this point, and I think that we eventually get there. Keep in mind that we are heading into the earnings season, and a lot of CEOs are out there giving a very pessimistic picture of the future. If that’s going to be the case, then we will continue to see stock selloff. Furthermore, in a high interest rate environment, technology stocks get killed, which of course is exactly what the NASDAQ 100 is made up of. Large-cap tech stocks continue to be the main driver what happens here, with just a handful of them mattering. So having said that you need to pay close attention to Microsoft, Amazon, Google, Facebook, and the like.
Rallies at this point in time should continue to be selling opportunities, and I believe that the 50-Day EMA, currently trading at around 11,750 level and dropping, should offer a certain amount of a “moving ceiling.” This is a market that is in a downtrend and I would not argue for anything different anytime soon. I think that given enough time, we will reach that 10,000 level, where I would expect a lot of noise. After all, the market has seen several of these short-term rallies like we saw on Thursday that got followed by a large red candlestick. I think that continues to be the pattern, and I just don’t have any interest in buying stocks at this point. Furthermore, if you are a trader that pays attention to valuations, they are still extraordinarily high for a lot of companies, so we still need to bring down the earnings multiple. Nonetheless, the simple solution is just to follow the trend which is most decidedly to the downside and it does not look like it’s changing anytime soon. I remain very bearish and look at rallies as another shorting set up.
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