- The Nasdaq 100 remains in consolidation despite recent sharp selling.
- Broader structure still favors an uptrend, with the index vulnerable to short-term volatility but positioned for a rebound once momentum returns.
The Nasdaq 100 initially rallied during trading on Wednesday, but in the same pattern that we've seen more than once recently, the Europeans and, to a lesser extent, the Asians overnight will buy into an index, and then when New York comes on board, it's all panic and fear.
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All things being equal, though, this is a market that, despite the fact that it's been very hard to deal with over the last week and a half or so, is still in the midst of consolidation. It certainly is not a downtrend yet, and in fact, there are a million ways I could define this as an uptrend to this point that has not changed.
Recent Selloff and Broader Market Context
We have seen a significant selloff of about 200 or so points in a straight line. And I think at this point, you could even extend it to a thousand points over the last, say, six or seven sessions. With that being said, and the fact that it hurts doesn't change reality. And the reality is that stock markets only go up given enough time.
This is not an equally weighted index. Therefore, I very rarely short this market. Remember, only a handful of stocks have to turn around and start rallying to change things. So, if Tesla starts to take off to the upside, Nvidia, et cetera, then the thing turns around pretty quickly.
Does that mean that we can't drop from here? Of course not. But what it does mean is that I will be on the sidelines looking for some type of bounce and V pattern that I can start buying into when momentum picks back up.
Right now, it looks pretty pathetic, but most of this is probably Wall Street whining about the fact that the Federal Reserve isn't going to go on automatic rate cuts. This is just the weak being weak again. Given enough time, the overall momentum still remains to the upside.
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