- The NASDAQ 100 bounced a bit during the trading session on Monday as we continue to see value hunters come back into the picture.
- That being said, the market is likely to continue seeing a lot of volatility as there has been so much confusion out there as to what the Federal Reserve is going to do.
- While it’s not a question as to whether or not they are going to tighten interest rates, the real question is whether or not the Federal Reserve will continue to be very aggressive.
- It’s very likely that they will be, but between now and then, traders will probably see a lot of noisy behavior.
Looking at this chart, the 50-Day EMA sits right around the 12,500 level and is dropping lower. That could be a bit of a “ceiling” in the market, therefore I think it’s only a matter of time before we see signs of exhaustion in that area. That should open up the possibility of shorting opportunities because quite frankly there are so many different things out there that could cause issues that it’s difficult to be overly bullish. The interest rates will continue to climb, and at the same time it’s likely that we will see is more likely than not see the Federal Reserve continue to speak very aggressively about inflation and the economy itself.
Wait for a Bounce to Short this Market
If the market breaks down below the lows of the last couple of days, then it’s likely that we could go down to the 11,500 level, and then possibly even the 11,000 level where we had bounced from previously. In this environment, it’s very difficult to imagine that technology stocks will take off for the bigger room, and therefore I think it’s likely that we will continue to see more of a “fade the rally.” Ultimately, this is a situation where we will see a lot of noisy behavior but do think that the downtrend will prevail. The only thing that will change this for any significant amount of time will be if Jerome Powell suddenly changes his tune. I just don’t know how that happens, but I suppose anything is possible. By the end of the week, we will probably see a bit of a bounce, followed by shorting in general. This is a situation where you simply wait for yet another opportunity.
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