- The NASDAQ 100 fell during the trading session on Wednesday, falling into the 50-day EMA.
- The NASDAQ 100 of course is starting to prep for the idea of the 3rd quarter earnings season, which obviously has a major influence on stocks.
- Keep in mind that this is not an equal-weighted index, so therefore you need to pay attention to the biggest players in the index, such as Amazon, Tesla, Microsoft, etc.
In other words, this is all about a handful of companies that everybody pays attention to. The 50-Day EMA hanging around this area obviously offers a certain amount of support as well, so you should pay attention to that as well. The market will continue to be very noisy, but I do think that Wall Street will come up with some reason to go back into the stock market and drive it higher. If we can break above the 15,250 level, then the market is likely to continue to go higher, perhaps reaching the 15,600 level. Underneath, the 14,600 level continues to be a major support level, and therefore we should pay close attention to it as it could be a bit of a “floor in the market”, as we have seen multiple times in the past. If we were to break down below there, then the market is likely to go looking toward the 200-day EMA below.
Position Sizing Will be Crucial
All things being equal, I think we continue to see a lot of volatility, not only since we have the earnings season going on, but we also have a lot of geopolitical concerns which of course can cause chaos in multiple markets, not just this one. I think given enough time, we will have to make a bigger decision but right now it’s obvious that the market has a lot of uncertainty in it, and therefore I think we need to pay close attention to what’s going on around the world, not just on the charts.
Position sizing will be crucial, so keep it reasonable and don’t get too aggressive one way or the other. Furthermore, you cannot use the NASDAQ 100 to give you an idea as to how technology stocks will go, because it is so heavily weighted to just a handful of companies.
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