You can see the Nasdaq 100 initially rallied just a bit during the trading session on Monday, as we continue to just plow higher. With that being the case, I think it's a scenario where it is only a matter of time before short-term pull banks get bought into. 17,000 underneath should be rather significant support, as it was previous resistance, and of course we have the 20 day EMA in that same neighborhood as well. With that being the case, I think you've got to look at this through the prism of buying on the dip and just simply writing the momentum.
The NASDAQ 100 is highly sensitive to momentum trading as some of the hottest stocks in the world are in the index. Remember, it's only about seven to 10 stocks that move everything, and as long as those stocks tend to be in vogue, then it makes sense that we go higher. The size of the candlestick during the day on Friday was rather impressive, and typically you do not get big candlesticks like that in a vacuum. Normally there is a significant amount of follow through, and that's exactly what I expect to see going forward.
In this environment, there's just no way whatsoever to be a seller of the NASDAQ 100, at least not until we break down below 16,000, which is light years below. If we were to break down below 16,000, that would obviously be a major turn of events. But right now, this is a market where every time it drops 100 points, you have to be interested in going long. I think that's probably going to continue to be the case going forward. This is a market that feeds on this kind of momentum, and therefore is a market that has a mind of its own.
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