NASDAQ 100
The NASDAQ 100 has been very negative during the trading month of March as we continue to see sellers jump in and start selling every time it tries to rally. We have formed several long wicks to the upside every week as every time we try to recover, fear reenters the market. This is mainly driven by the fact that a lot of headlines coming out of the Middle East continue to have people concerned about the global supply chain and of course the global economy.
Furthermore, the headlines out of the Middle East continue to drive interest rates higher as fears of inflation, mainly driven by energy, continue to be an issue as well. Remember, technology stocks don't do very well in a high-interest rate environment and of course that is exactly what we have here.
Technology Sector Sensitivity
That being said, the last week of the month does look like it is going to attempt to recover as the 22,800 region is support, but it is really not until we recapture the 24,000 region, maybe even on a weekly close, that it looks like the market is trying to turn things around. I do believe that this will continue to be a very noisy market and very possibly a market that is almost impossible to trade at times.
Position sizing will be the most crucial thing to pay attention to in April because quite frankly unless you know what the next headline coming out of the Middle East is, you are basically at the mercy of whatever next impulsive reaction shows up. With this, you have to keep an eye on the 10-year yield, it is extraordinarily high all of the sudden as people are worried about inflation and that could run counter to the direction of the NASDAQ 100.
For example, if we start to see yields calm down a bit in the United States, perhaps based on good news coming out of the Middle East, that will make NASDAQ 100 much more attractive. That being said, if we see interest rates continue to rise, that will send it lower. This is literally a market that is going to be trading interest rate markets and whether the yields are rising or not for the next couple of weeks.
Yes, it will be sensitive to Middle East headlines, but it is really the reaction in the markets as far as US Treasuries are concerned that you need to be paying attention to. I suspect that we are going to see more volatility in the month of April, but sooner or later we should start to see a bit of a bottoming pattern.