The NASDAQ 100 fell a bit last week but then turned around to form a bit of a hammer. That being said, the market looks as if it will continue to find buyers on short-term pullbacks, with the 50-day EMA offering a significant amount of support. If we can break above the top of the hammer that formed during the trading session on Friday, the market is very likely to go looking towards the 15,500 level. Breaking above that then would continue to send this market much higher.
Looking at this chart, we are sitting just above the 50-day EMA, which is going sideways. That being the case, it has offered a bit of dynamic support, but even below there we have plenty of support based upon the trendline that I have drawn underneath. Because of this, the market looks as if the buyers continue to see this as a value proposition. It is not until we break down below the bottom of the Monday candlestick that I begin to worry about the overall health of the uptrend. If that does in fact happen, it is very likely that the market will break down significantly, reaching towards the 14,500 level, and then the 200-day EMA near the 14,000 level. I would not be a seller, I would be a buyer of puts.
The markets continue to see a lot of pressure to the upside, and if we can continue to see more of that we will more than likely have buyers looking to take advantage of value. The NASDAQ is highly influenced by just a handful of stocks, such as Microsoft, Tesla, and Alphabet. After all, the market is weighted, with the top seven or eight companies pushing everything along. As those are the “Wall Street darlings”, I think it will continue to be the same story we have seen for so long. With the trend being so strong, it is difficult to imagine a scenario in which we would break down. I suspect that we will more than likely see the 16,000 level in the next couple of months, although it is very choppy to say the least. Start out slowly, and then build your position as you continue to see profits rolling into your account.
