- The NASDAQ 100 has been shooting straight up in the air for quite some time, and I do think that we will continue to see plenty of buyers jumping into this market.
- However, I would be remiss if I did not mention the fact that we are overbought.
- That is a relative term but at this point I just don’t know who’s left to buy NASDAQ 100 stocks. Remember, this is an index that is driven by a handful of companies, and therefore it is not equally weighted.
- In other words, it’s an ETF on all of the hottest stocks right now.
Passive investing has been a major culprit, as traders continue to buy into funds that are all by the same companies. This gives a false sense of strength to the index, but it’s also the game we are playing. You cannot look at the overall economy and try to gauge where the NASDAQ 100 is going. That ended 14 years ago during the Great Financial Crisis. In other words, you need to know what Nvidia, Tesla, Microsoft, etc. are doing to get a gauge on the NASDAQ 100.
Technical Analysis
I do believe that the 16,950 level below is a support level, followed by the 20-Week EMA near the 16,250 level. That’s an area that previously had been supported anyway, so it all ties together quite nicely. Are we overextended? Of course, we are, but we have been for some time. The question now is when will this end? If you want to make a killing in the markets and retire early, you need to know that answer, but right now we just don’t have the signs of mania that typically proceed with some type of meltdown.
I think you have to look at this as a “buy on the dip” market every time we pull back a couple of hundred points and hold your nose. Understand that sooner or later we will fall apart, and when we do it’s going to be quite shocking. This is not normal behavior in stock markets, and when you have all of the money concentrated in one spot, when everybody goes looking for the axis it gets to be a bloodbath. I do think one is on the horizon, but almost impossible timing.
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