- The NASDAQ 100 has fallen hard during the trading session on Tuesday, slicing through the 50-Day EMA.
- Ultimately, this is a market that I think will continue to see a lot of noisy behavior, therefore it’s probably worth noting that breaking through the 50-Day EMA is probably not a huge surprise, as the market may have gotten way ahead of itself.
- Furthermore, the market may have seen a bit of a “double top” form at the 12,000 level, which is a large, round, psychologically significant figure.
On a breakdown from here, we could drop to the 11,000 level given enough time, perhaps even down to the double bottom underneath at the 10,700 level being targeted. Ultimately, this is a market that is going to have to deal with a lot of economic headwinds this week, as Jerome Powell will be speaking at the Brookings Institute, and the market will be listening for any hints of what he is thinking. Furthermore, we also have the ADP employment figures, the Court PCE numbers, and the Non-Farm Payroll numbers on Friday.
Negativity Ahead
In other words, there’s a lot out there that could throw the market into disarray, but more importantly, I think you need to pay attention to the fact that the global economy is slowing down and we almost are certainly heading into a recession. Yes, the pundits on financial news channels keep trying to tell you that the entire recession has been priced in, but you need to keep in mind it’s their job to get you to watch financial news and buy stocks. Quite frankly, this is a market that might be a little overdone to the upside in the short term, but I don’t necessarily think that we are going to see some type of massive meltdown. I just think there is going to be plenty of negativity in general.
If we were to turn around and go to the upside, you need to keep an eye on the 12,000 level. If we break above there, then the market will almost certainly go investigate the 200-Day EMA, which a lot of traders will be paying close attention to. Anything above there could get this market rocking to the upside. I would not be looking for any type of move like that anytime soon, but obviously, there’s enough news out there that could change things very radically this week.
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