The NASDAQ 100 has bounced ever so slightly during the trading session on Wednesday to show signs of life, as we continue to hang around the 50-Day EMA. This is an area where we are going to see a lot of interest, and at this point, it’s likely that we continue to see this area be looked at with scrutiny.
Ultimately, this is a situation where we have seen a lot of noisy behavior, and we have just formed a “W pattern”, which of course is a very bullish pattern in general. I think we got a situation where the market is going to continue to be noisy, and that makes a lot of sense considering all the different things that are going on over the last 3 days of the week. After all, we have Jerome Powell speaking in front of the Brookings Institute, and traders will be paying close attention to any hints that he gives as to how hawkish the central bank will be. After that, we have the Core PCE numbers coming out of the United States, which is a favored inflation metric used by the Federal Reserve. On Friday, we have the Non-Farm Payroll numbers coming out, and that of course has a lot of influence on where we go next.
Waiting for the Santa Claus Rally
- On the other hand, you can make an argument that the “Santa Claus rally” will be coming, because quite frankly end of year markups will continue to be an issue.
- Traders try to convince their clients that they are holding all of the “correct assets”, because by the end of the year everybody needs to come up with an excuse for underperformance.
- That being said, there are a lot of headwinds out there and it would not be surprising at all to see the markets take a bit of a dump.
If we do fall from here, the 10,800 level would be a target, which was previous support. On the other hand, if we turn around and rally, we could take on the 12,000 level. The 12,000 level is an area that has been resistant recently, forming a bit of a potential “double top.” Breaking above that opens up the possibility of a move to the 200-Day EMA above, currently sitting right around the 12,400 area.
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