The NASDAQ 100 has been very bullish the entire year, but at this point, the index is up about 40%. Obviously, gravity has to come back into the picture sooner or later, and it’s probably worth noting that the last couple of weeks for July are starting to form shooting stars, which of course is a technically negative signal. This doesn’t necessarily mean that we need or are going to fall apart, but there are a lot of reasons to think that August might be a little bit limp
To begin with, it’s typically a very quiet time of year. Most traders will be focusing more on vacation instead of sitting in front of the screen. That being said, it could very well be positive but maybe in a more muted manner. Nonetheless, I suspect that this bond probably is a little bit of a pullback just waiting to happen, and the big clue will be if we drop below the 15,250 level, an area that has previously been resistance, it should now offer a bit of support in the future, based on “market memory.”
As I’m writing this, I’m listening to Jerome Powell be somewhat noncommittal to the future, and it suggests to me that the Federal Reserve is still guessing as to what is going to do. Keep in mind that I am also writing this in the middle of earnings season, which of course has its own dangers. Comparisons to a year ago are going to start getting very difficult, and there are some signs of cracks in the economy. That being said, Wall Street will come up with some type of narrative to sell you stocks down the road. The most important thing to keep in mind when looking at indices is to understand that it’s the job of Wall Street to sell you stock. In other words, these things are designed to go higher up the longer term. That does not mean that we can’t pull back, and we most certainly will sooner or later.
- I would be looking for a bit of value during the month of August, perhaps closer to the 14,600 level underneath.
- I would love to get somewhere closer to the 13,750 level, but I suspect that if we fall that far during the month of August, it would probably be in the midst of some type of bloodbath.
- The alternate scenario is that we take off to the upside and break above 16,000.
- At that point, we would almost certainly be looking at breaking the all-time highs.
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