The NASDAQ 100 initially tried to rally on Wednesday, but then broke down to show signs of weakness again. As I record this, we are testing the bottom of the neutral candlestick from the previous session, and if we break down below there, extensively the 13,600 level, the NASDAQ 100 could find itself plunging quite drastically. Because of this, any drift below that level could open up the possibility of a move towards the 13,500 level, which is a large, round, psychologically significant figure.
Looking at this chart, it does look like we are getting ready to see some type of massive selloff, and I think we will continue to see more bearish pressure, especially as this market is moved by just a handful of companies, so it is going to take just a handful of them to start falling in order to really put pain into this market. For example, Apple and Tesla alone can bring this market down if they really start to melt down.
It will be pretty interesting to see whether or not we can recover, because the futures markets have been a mess and with all of the geopolitical concerns out there, such as inflation worries and the tightening monetary policy from the Federal Reserve, it is difficult to imagine a scenario where the high growth companies that make up the leadership of the NASDAQ 100 will simply take off to the upside. The candlestick is very ugly-looking, so it is probably a situation where any short-term rally get squashed. In fact, I think that will continue to be the case until the Federal Reserve steps in and does something, which they are not quite ready to do yet. After all, they have not even gotten to the point where they have made the first interest rate hike. We are seeing Wall Street fall apart at the mere mention of this happening, so that tells you just how damaging this is going to end up being. Yes, we have seen a major move lower, but we may have much further to go based upon the fact that we have just broken down below a major support level during the day. Because of this, I think buying is all but impossible.
