- The NASDAQ 100 rallied a bit during the trading session on Wednesday, as the market had gotten a bit oversold.
- In fact, we ended up forming a bit of a hammer during the Tuesday session, so it’s not a huge surprise to see that we bounced a bit on Wednesday.
- I don’t think anything has changed from a longer-term fundamental point of view; I think this will end up just being a nice selling opportunity.
At this point, the 50-Day EMA is near the 11,500 level and should offer a little bit of a short-term resistance barrier, therefore I think it would be interesting to see whether we start selling off in that region. Signs of exhaustion will be jumped on, as the NASDAQ 100 has been extraordinarily sought. Ultimately, I think this is a situation where there is probably a potential shot higher as we head into the holidays, if for no other reason than a simple lack of volume.
Market to Deteriorate Rapidly
If we do fall from here, then taking out the bottom of the hammer from the trading session on Tuesday would be a very negative turn of events and could send this market much lower. In that scenario, I anticipate that we revisit the lows near 10,400, and perhaps even break down below there, to kick off the next leg of the massive bear market.
Ultimately, I think it’s difficult to get overly excited about owning the stock market in general because quite frankly there are major problems coming for the global economy, and of course, monetary policy continues to be very tight and looks to be staying that way for quite some time. With that being the case, I think technology stocks, and the NASDAQ 100, in general, will suffer. Ultimately, I believe that we have much further to go to the downside as the recessionary headwinds will continue to capture a lot of headlines. I think that this is a market that is going to deteriorate quite rapidly, right along with other risk appetites. However, we may get a little bit of a reprieve at the end of the year just simply because there won’t be as many people shortening it. The truth will more likely than not be exposed by the time we get through the first week of January.
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