- The NASDAQ 100 initially tried to rally on Tuesday but gave back gains near the 11,150 level.
- The fact that we failed should not be a huge surprise, because quite frankly this is a market that has been very negative for a while, and of course must worry about interest rates rising. Interest rates did in fact rise during the trading session, so it all comes together for negativity.
- The 10,650 level underneath should offer a bit of a barrier, and it may extend all the way down to the 10,500 level.
If we were to break down below the 10,500 level, then it is likely that we go much lower. At that juncture, I would anticipate that the NASDAQ 100 could go down to the 10,000 level. Short-term rallies at this point should continue to be sold into at the first hints of exhaustion, especially if we were to get near the 50-Day EMA right around the 11,300 level. It’s also worth noting that we had broken down below the bottom of a megaphone pattern, so it does make quite a bit of sense.
Noisy Behavior Ahead
The next couple of days will probably be noisier than anything else, mainly since we have seen a lot of concerns coming out of the central bank, as the Federal Reserve is likely to continue keeping the market very tight. Tight monetary policy works against technology and higher-risk stocks, so that has a lot of negativities thrown at the NASDAQ 100. Ultimately, I think the next couple of days should be a nice range-bound system type of environment, and those who are comfortable in that environment will find them very interesting.
I don’t have an interest in buying this market, at least not anytime soon. The jobs number, if it were to come in hotter than expected, could very well offer yet another reason for stocks to fall, because everybody is paying close attention to the monetary policy, and of course, there is a huge correlation between jobs and what the Federal Reserve ends up doing. Because of this, we may get a lot of noisy behavior between now and Friday, but once we get past that announcement, we could see this market take off in one direction or the other.
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