The Nasdaq 100 initially tried to rally on Wednesday, but the issues between the United States and Europe continue to cause hesitation by traders.
The Nasdaq 100 initially tried to rally on Wednesday but has turned around to show signs of exhaustion and negativity as well. In fact, the market is now below the 25,000 level, and I think you have to look at the 25,000 level as a major psychological scenario and support level. The fact that we are below there opens up the possibility of a drop down to the 24,750 level.
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The market is soft mainly due to the headlines coming out of Greenland between the United States and Europe, so as long as that's going to be the case, I think we continue to see a lot of uncertainty in the Nasdaq 100. Despite the fact that most of the companies on the Nasdaq 100 that truly matter are doing fine, the overall risk-off attitude out there will continue to work against the value of the Nasdaq 100.
If we can turn around, perhaps due to some type of positive headline coming out of President Trump's Davos speech today, then we could send this market looking to the 50-day EMA.
Longer Term Rally
Longer term, I still believe that the Nasdaq 100 level is going to rise over time and perhaps take out the 26,000 level and continue the longer-term rally. Even if we were to drop from here, I look at this as a market that will offer opportunities on dips.
The economy is fine, and eventually earnings matter. I don't think this is a market that you should be shorting, and a little bit of patience and waiting for a bounce after a drop should be the profitable way.
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