The NASDAQ 100 got hit hard to the downside during the trading session on Monday, as it looks like we will try to get to the uptrend line underneath. Even if we do break down below there, there is plenty of support near the 50-day EMA near the 12,375 handle. The biggest problem that this index may have is not necessarily that it should be shorted, but perhaps that the markets are starting to do a bit of rotation out of the usual tech companies, as the NASDAQ 100 is moved most of the time by just a handful of them. In other words, it is likely that some of the smaller companies are going to start to see a little bit of buying pressure, as shown by the fact that the Russell 2000 has been strengthening over the last several weeks.
This means that the long-term move to the upside will likely be more sustainable, as it will not be completely held hostage by just the big technology companies. Another thing that may have weighed upon the NASDAQ 100 during the trading session is that Twitter took an absolute header due to the fact that there are concerns that federal regulators may get involved with social media companies due to the censorship of various apps and well-known people. The question now becomes whether or not big tech is starting to overstep its bounds? Parler has filed a lawsuit against Amazon after they were kicked off of the cloud service that the company hosts. In other words, there is a lot of turmoil that could be coming to technology companies that have been the big leaders of this index, because the Democrats do not necessarily have a great amount of love for some of the shenanigans on social media.
I still think that we will go higher, and I have no interest in trying to short this market. I think the 50-day EMA at the 12,375 area will be a short-term floor, just as the uptrend line will be and most certainly the 12,000 level will be. I believe that the market will go to the 14,000 level, but that does not mean it has to get there overnight. The markets have been overbought for a moment now, so this pullback should be welcomed, as it should give you an opportunity to buy on the day.