The Nasdaq 100 has shown signs of life again, as the CPI numbers in the United States were lower than expected, helping traders expect the Federal Reserve to hold. Whether they do or not remains to be seen.
NASDAQ 100
The Nasdaq 100 rallied quite nicely during the trading session on Tuesday, bouncing from the crucial 50-day EMA. We are in a bit of a symmetrical triangle. We'll see whether or not we can break out above it, but it certainly looks like we are trying to squeeze to the upside.
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The market has been compressing for a while, and I think that if we can break out to the upside and go looking to the 30,000 level, an area that's a large round, psychologically significant figure, and will attract a lot of headline noise. If we break above there, then I'll be looking for the market to go to the 30,500 level. Breakdowns from here could open up a drop down to the 28,500 level, an area that previously had been important.
Macro Drivers: Earnings, AI, and Interest Rates
Ultimately, this is a market that's been chopping around after a major shot to the upside, and I think we're just trying to work off some of that excess froth. Keep in mind that earnings are coming and that, of course, will have a major influence, and we are still paying attention to the artificial intelligence trade, which is a major factor as well.
Ultimately, this is a market that's not only paying attention to the AI trade, but we're going to be paying attention to the interest rate situation, and if interest rates, of course, are dropping due to the weaker-than-anticipated CPI numbers, that gives people a reason to start buying stocks. I do think longer term we're still bullish, but we're just looking for some type of catalyst.
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