- The NASDAQ 100 dipped early Wednesday before recovering sharply as traders embraced the expected 25-basis-point Fed cut.
- Momentum points toward higher levels, with strong risk appetite and year-end positioning supporting continued buy-on-the-dip behavior.
The NASDAQ 100 initially fell during trading on Wednesday but then turned around the showed signs of life again. By doing so, this looks like a market that got the news that it wanted from the press conference because, quite frankly, pretty much everybody thought that the Federal Reserve was going to cut 25 basis points. With that being the case and the fact that we are moving beyond now, I think you are looking at a NASDAQ that is trying to get to the 26,000 level, and given enough time, I think they probably will see that area targeted.
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Bullish Momentum and Seasonal Influence
Over the longer term, I anticipate that this is a market that will make a fresh new high, and with the bullish pressure that we have seen during the day, I think this shows that the Santa Claus rally might be kicking off. If that is, in fact, going to be the case, then I anticipate that we will see an impulsive move to the upside.
Short-term pullbacks are almost certainly going to end up being buying opportunities in this market. And with that, I think you have to believe that the NASDAQ 100 is probably going to continue to benefit from risk appetite out there picking up. I have no interest in shorting this market, and I think it is probably only a matter of time before we see the markets react in a strong positive way as we continue to see plenty of buy on the dip behavior from most traders as we approach the end of the year, and of course, performance gets chased.
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