The NASDAQ 100 rallied a bit during the trading session on Friday as the 50-day EMA has come into the picture. The 13,500 level seemed to be a little bit too much, and it certainly looks as if we are dropping quite a bit. Nonetheless, I think there are more than enough reasons to think that the support underneath could come into play, so with that I think that the market is probably going to see the uptrend line and the 13,000 level as a bit of a “floor in the market.”
The shape of the candlestick is negative, but at the end of the day I do not think that you can read too much into it, as it has been a relatively small range. Furthermore, traders will probably willing to take a little bit of profit, as we had seen such a massive bounce from the 13,000 level. That being said, if we can break above the highs of the Friday session, then it probably opens up the possibility of a move back to the 14,000 level, which was the most recent all-time high.
If we do turn around and break down below the 13,000 level, then it is possible that we could go looking towards the 200-day EMA. The 200-day EMA is what most people used to define the overall trend, so breaking down below there could be a scenario in which I would be a buyer of puts, because I just do not waste my time shorting indices in the United States as they are so manipulated by liquidity measures coming out of the Federal Reserve, and the fact that the overall momentum is to the upside.
The trend is higher, so that is how you have to look at this market in general. If we can break above the 14,000 level, then I believe the next target would be 14,500, but it is difficult to imagine us getting there quite easily. I think we need to chop overall to the upside in order to finally chip away at all of this short-term selling pressure. Pay attention to yields in America, because if they stay relatively subdued, that could help stock markets as well.
